Bank of England Calls for More Regulation as U.K. Crypto Firms Express Frustration With Current Rules
The Bank of England has called on policymakers to expand crypto market regulation, but many U.K. firms are already frustrated with current rules and requirements.
- The Bank of England’s Financial Policy Committee has called for additional regulations on the cryptocurrency industry.
- Meanwhile, many U.K. crypto firms are struggling to comply with existing regulations.
- Crypto businesses are required to register with the Financial Conduct Authority by Mar. 31, but some have complained of the government being too slow to process the applications.
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Several U.K. crypto firms are struggling to register with the Financial Conduct Authority ahead of its Mar. 31 deadline. At the same time, the Bank of England’s Financial Policy Committee has called for expanding existing regulations to ensure financial market stability.
U.K. Crypto Firms Caught Out
While U.K. crypto firms grapple with existing rules, policymakers look to step up regulation.
The Bank of England’s Financial Policy Committee has called for expanding current cryptocurrency regulation in a bid to protect the stability of financial markets. In the Financial Policy Committee meeting minutes published Thursday, policymakers acknowledged the benefits that crypto technology can provide the U.K. while also calling for increased regulation to reduce financial stability risks.
“The FPC is monitoring a number of channels through which cryptoasset markets and activities could pose risks to U.K. financial stability,” the committee said, highlighting that because many cryptocurrencies have “no intrinsic value,” they are vulnerable to “major price corrections.” The committee stated that while the immediate risks to the U.K. financial system are limited, as more companies and banks put cryptocurrencies onto their balance sheets, the threat to financial stability increases.
However, while the Bank of England makes its case for increased regulation, crypto firms operating in the U.K. are struggling to comply with the existing rules and requirements. Several companies could be forced to cease operating in the U.K. if they fail to register with the Financial Conduct Authority ahead of the Mar. 31 deadline.
According to a report from CNBC, industry insiders are unhappy with the FCA’s registration procedures, with many citing that the regulator had been slow to approve applications and was often unresponsive. One lawyer involved in registering crypto firms with the FCA called it a “total disaster” on the part of the regulator. The consequence is that fintech companies such as Revolut and Copper may be forced to wind down their crypto activities if they fail to meet the upcoming FCA deadline.
While firms struggle to appease regulators, crypto adoption in the U.K. is growing fast. According to data from Finder, 6.1% of Britons reported owning cryptocurrency as of March 2022, more than double the amount who reported holding digital assets in 2018. Institutional interest in crypto also appears to be intensifying, with one report from August 2021 revealing two-thirds of institutions and wealth managers surveyed had recently increased crypto allocation in their portfolios.
With the appetite for cryptocurrency investments increasing, policymakers and regulators will need to work quickly to accommodate innovation while also ensuring adequate guidelines are in place to protect financial stability.
Disclosure: At the time of writing this piece, the author owned ETH and several other cryptocurrencies.