The Bank of England (BoE) recently announced the need for a well-advanced and improved crypto regulatory framework. It added that crypto regulation is important to tame the industry from destabilizing the financial economy of the UK.
Crypto Is Not Yet Strong Enough To Affect UK Finances
In the recently released report, the BoE pointed out several factors that he claimed are ominous factors to the future of the UK’s finance. Amidst the list, it included the volatile crypto market and the varying climatic conditions.
The central bank added that these factors are currently not a threat but they may become one if not tame soon. Sighting examples, BoE mentioned insolvency, liquidity mismatch, theft, investors losing confidence in crypto, and others.
It added that if these recent unfavorable happenings are not corrected soon, they would harm the country’s finances. Furthermore, the prime bank mentioned that if the crypto industry and its impact on the general financial economy continued to grow, things might get ugly.
He said this emphasized the need for an improved and well-structured regulatory system to tame the raging volatile market.
In 2021, traditional finance significantly lost value, dropping below 900 billion from $3 trillion. The same factors that caused the financial instability last year were reportedly present within the crypto industry now.
BoE Called For Regulatory Framework To Tame Crypto
In the recently concluded press conference, Andrew Bailey, the governor of BoE, commented on the matter. He maintained that the current bearish crypto market did not spike any fear or threat concerning the farewell of the UK’s financial economy.
Furthermore, Jon Cunliffe, BoE deputy governor, mentioned that the current decline in Bitcoin and Ethereum’s prices has no significant effect on their economy. He added that the crypto economy is not yet strong enough to have a noticeable effect on the country’s economy.
Cunliffe emphasized that blockchain tech has little to no effect on laws guiding finance, economics, and risk. He added that crypto is worth the same price paid for it and has a high risk of losing its value.
He continued that the market is controlled by people’s sentiments which is very risky. Additionally, he said that the risks in the crypto industry need to be controlled as it is dome in the traditional finance system.
Therefore, he called for an enhanced regulatory crypto framework to govern the affairs of the crypto industry. In Addition, Janet Yellen, Secretary of US Treasury, reportedly approved the BoE’s suggestion.
After UST crashed and USDT depegged shortly, Yellen stated that stablecoin events are not strong enough to affect the country’s finances. She added that if untamed, the crypto market may grow to the extent of putting the UK’s finances at risk.