The Bank of England is set to sketch the first regulatory framework for crypto. According to the institution, the industry could pose risks to financial stability without being unregulated. The Bank mentioned that although the sector is still small, it sees rapid growth.
Related: UK FCA Tells Operators To Shut Down Crypto ATMs
Discussions over crypto became more intense after the start of the Russia-Ukrainian war. Lawmakers expressed concerns that Russia can use crypto to circumvent sanctions.
BoE Financial Policy Committee said in a statement that crypto's being a feasible way to avoid restrictions at scale is unlikely. However, the bank mentions the possibility of such behavior, pointing out that it shows the importance of making certain that crypto innovation goes along with effective public policy frameworks to maintain trust and financial integrity.
The FPC writes crypto technology performs an equivalent economic function as the traditional financial sector, so it should operate within existing regulatory arrangements. According to the community, regulations are needed for the growth of crypto and decentralized finance.
FPC said it supports international work to address existing issues, including the Financial Stability Board to coordinate an approach to unbanked crypto.