Bank of England Calls For Crypto Regulation
In its latest Financial Stability Report, the Bank underscored the need for enhanced regulatory and law enforcement frameworks.
Bank of England's Financial Policy Committee (FPC) warned that altough the recent “extreme volatility” in crypto prices did not pose a risk to the stability of the U.K. financial system, the crypto sector is in urgent need for tougher law enforcement and regulation.
As reported in its latest Financial Stability Report, “cryptoasset valuations have fallen sharply - with market capitalisation fallen to US$900 billion from a peak of almost US$3 trillion in late 2021 - exposing a number of vulnerabilities within cryptoasset markets, but not posing risks to financial stability overall.”
However, the Financial Stability Report suggest that “systemic risks would emerge if cryptoasset activity, and its interconnectedness with the wider financial system, continued to develop. This underscores the need for enhanced regulatory and law enforcement frameworks to address developments in these markets and activities.”
The report also warn that “given downside risks from additional supply shocks, faster-than-expected monetary policy tightening and slower-than-expected economic growth, risky asset prices remain vulnerable to further sharp adjustments.”