The Bank of England (BoE) called for stricter financial regulations because of the recent cryptocurrency crash in Tuesday’s Financial Stability Report. According to the U.K. central bank, the growing integration of the cryptocurrency market with the larger financial system increases risk. The BoE stated in its assessment, “Several vulnerabilities, including liquidity mismatches and over-leveraged positions, were revealed inside crypto-asset markets comparable to those exposed by earlier episodes of volatility in more traditional areas of the financial system.” Following Terra’s algorithmic stablecoin debacle, the BoE is the most recent central bank to join the crypto pile-on. Financial Policy Committee of the Central Bank The BoE also stated that stablecoins, particularly those with riskier backings or less transparency, have lost investor confidence. According to the financial policy committee of the central bank, if employed in payment systems, stablecoins must adhere to the same stability and redemption norms as commercial bank money. The statements from the BOE come as the European Central Bank (ECB) is scheduled to meet on Tuesday and is expected to discuss the issue of coordinating cryptocurrency regulation across the various EU member states until the Markets in Crypto Asset Regulation (MiCA) is passed into law. The agreement among the various institutions about the parameters of the new crypto law, which will control t...
