The Bank of England has called for international cooperation on cryptocurrency regulations amid the challenges the bank faces in collecting data on institutional investors’ exposure to crypto, The Sunday Times reported on December 19.
“The ability to get data on what institutional investors are [holding] is a challenge. This is not something the UK can solve all on its own,” said Sarah Breeden, executive director for financial strategy and risk at the Bank of England.
Breeden pointed out that more banks are looking to offer cryptocurrency trading and custody services, hence the need for greater transparency and global rules to protect investors’ interests and the financial system.
Remarks made by Breeden resonate with the ones made in the financial stability report published by the BoE on December 13. At the time, the bank noted that cryptocurrencies currently do not pose direct risks to the UK’s financial system. However, with this new asset class growing at a rapid speed, it may pose a stability threat in the near future.
As a countermeasure, the report argued the need to strengthen the regulatory and law enforcement framework at the national and global levels.
The news comes after deputy Bank governor Sir Jon Cunliffe told BBC that crypto assets could thwart existing financial systems due to their highly volatile nature.
“The point, I think, at which one worries is when it becomes integrated into the financial system, when a big price correction could really affect other markets and affect established financial market players,” Cunliffe said in the interview.