To counteract the fast-moving market, the Bank of England (BOE) warned on Monday that regulatory and legal frameworks for crypto assets would need to be strengthened both locally and worldwide. The bank stated in its December financial stability report and financial policy committee (FPC) meeting minutes, both of which were taken on November 29 and December 9, that the changes would manage risks, encourage sustainable innovation, and maintain broader trust and integrity in the financial system.
The bank’s Governor, Andrew Bailey, is warning banks and other regulated financial organizations to be very careful about owning volatile crypto assets. Bailey added that future laws for crypto assets will combine risk management with the need to foster innovation and competition.
While acknowledging the benefits of innovation, the Bank of England stated that these changes would only be sustained if strong public policy frameworks were in place. The FPC also expressed support for the UK Treasury’s proposal earlier this year for a legal framework controlling the use of stablecoins as a form of payment. This included proposals for putting systemic stablecoins under the regulatory purview of the bank.