Regulate to avoid risks to the financial system.
This is the recommendation of the Bank of England (BoE).
She believes this Thursday that the regulation of cryptocurrencies must be increased so that the recent growth of the sector does not turn into systemic risk.
"The direct risks to the stability of the UK financial system created by crypto-assets and decentralized finance (DeFi) are limited for the time being", acknowledges the central bank in its financial stability report.
"But if the growth [of the sector] of recent years continues and these assets become more connected to the rest of the financial system, they would represent a risk," she warns.
trillions of dollars
“The potential value of cryptoassets increased tenfold between early 2020 and November 2021, reaching $2.9 trillion at its highest,” the institution estimates.
However, it judges that with a decline to 1,700 billion dollars in early March, the sector represents only 0.4% of global financial assets.
"In September 2021, 13% of US hedge funds and 23% of European hedge funds owned crypto-assets", although these are probably investments in small amounts, specifies the BoE based on based on data published by the Fidelity fund.
The BoE specifies that this systemic risk is to be separated from the dangers for retail investors, which concern more the policeman of the British markets (FCA), but the central bank seems ready to take on at least part of the role of regulator.
“The Financial Policy Committee (FPC) believes that where crypto technologies have a function similar to that of a traditional finance player, they should act within the framework of the regulations that currently exist, and the regulatory perimeter should be adapted. », Details the BoE.
Clearly, if a company issues a stablecoin, that is to say a cryptocurrency backed by a currency, it should be regulated like a bank in the United Kingdom, and report to the BoE.
Avoiding Sanctions in Russia
“Any decision on an adaptation of the perimeter and the framework of the regulators must be taken by the government”, specifies the BoE.
This message from the BoE comes as the major central banks are taking the subject of crypto-assets head on, fearing among other things their use by Russia to avoid part of the Western sanctions.
The President of the European Central Bank (ECB), Christine Lagarde, warned on Tuesday of the "threat" posed by cryptocurrencies obtained in exchange for rubles in an attempt to circumvent sanctions.
Of all the digital asset classes, "cryptoassets concern me the most in the Russian context," she said.
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