The Bank of England (BOE) said on Monday that regulatory and legal frameworks for crypto-assets would have to be ramped up both domestically and globally to combat the fast-moving market.
In its December financial stability report and financial policy committee (FPC) meeting minutes, taken on November 29 and December 9, the bank said that changes would “manage risks, encourage sustainable innovation and maintain broader trust and integrity in the financial system.”
While recognizing the benefits of innovation, it said these developments would only be sustainable alongside “effective public policy frameworks.”
The FPC also said it welcomed the UK Treasury’s proposal, put forward earlier this year, for a regulatory regime for governing the use of stablecoins as a means of payment.
This included recommendations for bringing systemic stablecoins into the bank’s regulatory remit.
This is the latest in a series of comments the bank has made on potential crypto regulations. Deputy Governor for Financial Stability Jon Cunliffe suggested in November that crypto-assets could potentially destabilize the UK’s financial system.
Cunliffe warned at the time that regulators would have to “think very hard” about the risks, due to the growing use of cryptocurrencies within the world’s traditional financial systems.