The Bank of England says the “extreme volatility” in the crypto market “underscores the need for an increased regulatory and law enforcement framework.” The British Central Bank has warned that crypto prices could fall further.
Bank of England calls for enhanced crypto regulation
The Financial Policy Committee of the British central bank, the Bank of England (BOE), said on Tuesday that the “extreme volatility” in crypto prices in recent months underscores the weaknesses in the crypto market, Bloomberg reported.
Citing a $2 trillion reduction in the total market capitalization of cryptocurrency assets, the Bank of England stressed the need for stricter law enforcement and regulation for the crypto sector, the publication reported. The market cap of all cryptocurrencies is currently around $1 trillion. It was about $3 trillion at its peak in November last year.
Last month, Bank of International Settlements (BIS) general manager Agustín Carstens said that all vulnerabilities in the crypto market “have materialized to a large extent what was previously reported.” These include liquidity mismatches and participants opening leveraged positions.
The British central bank warned that the crypto market could fall further:
This underscores the need for advanced regulatory and law enforcement frameworks to address developments in these markets.
Noting that volatility in the crypto market does not currently pose a risk to the stability of the UK financial system, the central bank cautioned that if crypto activity and its interoperability with the traditional financial system continue to increase, systemic risks may emerge. Will.
Last month, the European Central Bank[ईसीबी]President of Christine Lagarde had similarly said: “Cryptocurrency assets and decentralized finance[डीएफआई]has the potential to pose a real risk to financial stability.”
The Bank of England’s deputy governor for financial stability, Sir John Cunliffe, has said on several occasions that the cryptocurrency market could pose a threat unless regulated immediately. He warned of tough times for cryptocurrency investors in May as the Federal Reserve and other central banks tightened monetary policy. In December last year, he said that crypto prices could drop to zero.
Bank of England Governor Andrew Bailey said in June that investors should be prepared to lose all their money when investing in crypto assets. He stressed that cryptocurrencies have no intrinsic value and bitcoin is not a practical means of payment.
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