Bank of England calls for tighter grip on global crypto markets

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Sunday 19 December 2021 12:35

Bank of England calls for international cooperation on crypto regulation and oversight (Photo by Peter Macdiarmid / Getty Images)

UK central bank bigwigs will step up talks with their international counterparts to put in place a regulatory regime for crypto assets.

Sarah Breeden, Executive Director of Financial Strategy and Risk at the Bank of England, said that as financial institutions, including banks, begin to offer cryptocurrency and custody services to clients, new rules must be designed to protect the global economy.

The central bank faces “challenges” in finding reliable data on the crypto holdings of institutional investors, Breeden said in comments first reported by The Times as she called for international cooperation to regulate and monitor digital assets.

“The ability to obtain data on what institutional investors are [holding] is a challenge, ”Breeden told The Times. “It’s not something the UK can solve on its own.”

Currently, only 0.1% of UK household wealth is believed to be in crypto, with around 2.3 million Britons holding an average of £ 300 of digital assets each. Although UK holdings size remains small, the global crypto market has approached a market cap of $ 3 billion this year, meaning the asset class poses a growing threat to global economic stability. according to the Central Bank.

“If someone had borrowed money against that, or if some institutional investors are holding it in their portfolios, that’s when you can get the kind of ripple effects that matter to us by. as a financial stability authority, ”Breeden said.

“The closer these assets get to the heart of the financial system, the more significant these spillover effects are likely to be.”

Breeden echoed Bank of England Deputy Governor for Financial Stability Jon Cunliffe, who last week underlined the urgent need for regulation as a growing number of financial institutions plunge into the crypto space.

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The adoption of crypto in the financial sector poses a risk to the economy – BoE

The process of developing global regulations is already underway.

The Financial Stability Board, a body that brings together central banks from around the world, is planning discussions on international crypto regulation, Breeden said. Meanwhile, the EU and US are developing regulatory frameworks to give more clarity to crypto companies and institutions that hold digital assets.

“We don’t have a suitable regulatory framework for cryptocurrencies yet, but what we’re doing is rolling up our sleeves and getting ready to build it,” Breeden said.

Read more: Red alert: UK watchdog steps up campaign against crypto ads

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