The Bank of England has said the crypto market requires a firm regulatory framework. And not just that, the market also requires a dedicated law enforcement style. All these are because of the volatility the market experiences from time to time.
The Bank equally cautioned that asset prices in the market could still fall further.
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A Call for Enhanced Regulations
The Bank of England’s Financial Policy Committee said extreme volatility is responsible for crypto vulnerability. It is, therefore, the main reason why the market needs serious monitoring and oversight.
The bank said there has been a $2 trillion loss in the market. This is just in the current round of market downturn. Hence, the need for stricter law enforcement in the sector, the Bank said.
This would help to protect the interest of investors and other asset holders. The total market capitalization of the market is now around $1 trillion. The market had close to $3 trillion at its height last November.
The Manager of the Bank of International Settlement gave his view of things last month. Agustin Carstens said every weakness mentioned about the crypto market has materialized. These include traders unwinding positions and liquidity mismatch in the market.
The Bank of England gave heads up that the market could slide further. The Bank stated this as the basis to urgently address market developments.
Louder Calls of Caution
The crypto volatility is not presently presenting a risk to the British financial framework. The central bank, however, warned that risk could occur at a later date. This is if the connection between the crypto market and the financial system keeps growing.
The President of the ECB, Christine Lagarde, voiced her concerns over the potential threats. She said in June that crypto and DeFi could pose a danger to financial stability.
The deputy governor of the BOE on financial stability had on many occasions aired his opinion. Sir Jon Cunliffe is of the view that crypto could threaten the economy. He called for an urgent regulation to be implemented.
The executive had issued a warning in May of hard times for crypto investors. His reason was the hawkish monetary policy of the US Fed and other central banks. He equally said last December that crypto prices could go down to zero.
Governor Andrew Bailey of the BOE said investors might lose all their money in crypto. This statement was made in June as a warning saying crypto has no intrinsic value. He also said that assets like Bitcoin are not a practical method of payment.