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Bank of England publishes regulatory framework for cryptos

With the growing popularity of cryptocurrency, central banks around the world are accelerating regulation of the burgeoning industry. And the latest to jump on the bandwagon is the UK’s Bank of England.

Last week, the Bank of England released financial stability reports relating to crypto-assets and decentralized finance (DeFi). The bank’s Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) also simultaneously issued documents referencing each other.

“Where crypto technology performs an equivalent economic function to that performed in the traditional financial sector, the CPF believes that this should take place within existing regulatory arrangements and that the regulatory perimeter should be adapted if necessary to ensure an equivalent regulatory outcome. “, said the Bank. from England’s Financial Policy Committee in a statement, according to

The report released last week primarily tracks the existing regulatory framework as a way to mitigate crypto technology risks in traditional finance. The Financial Policy Committee (FPS) also adopted the Treasury’s proposal to regulate stablecoins, involving banks in this process. The Treasury proposal was in favor of taking into account international efforts to regulate DeFi applications.

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The published FCA notice reminded regulated firms of their “existing obligations when interacting with or being exposed to crypto-assets and related services.” The advisory specifically emphasized the point of “being clear with customers” about regulation and risk.

The FCA notice also paid particular attention to anti-money laundering (AML) rules and records. The FCA pointed to a substantial list of unregistered crypto-asset firms in the country. They have set a deadline for unregistered and temporarily registered crypto firms to formalize their existence. Companies have until March 31 to register. If they don’t register, they risk being shut down by regulators.

Crypto regulation mania

Over the past few months, a host of countries have formed some sort of regulatory structure to govern the burgeoning asset class. The Indian government has also recognized cryptocurrencies and imposed a 30% flat tax on profits from digital assets from April.

Earlier this month, US President Joe Biden released the long-awaited Executive Order on Cryptocurrency and Digital Assets, which received mostly positive feedback from industry veterans. Dubai also passed its first cryptocurrency regulations and created a governing body to oversee the industry.

El Salvador has even adopted bitcoin as legal tender and citizens can use it for daily transactions. Several countries are also working on their central bank digital currency (CBDC) projects, with China already running a pilot program for its CBDC in some provinces.

Therefore, as more and more countries move towards crypto regulation, it looks like the industry is finally being recognized as a true asset class, and not just a passing fad or speculative bubble that will burst. soon.

(Edited by : Bivekananda Biswas)

First post: STI


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