Wednesday, January 26

Bank of England asks to face global bank crypto services

The Bank of England (BoE) will intensify talks in 2022 with its international counterparts to tackle crypto products offered by banks. Such as the sale and custody of cryptocurrencies that some banks are already offering to their customers. Sarah Breeden, the entity’s executive director of financial strategy, has stated that global regulators need new rules to protect the financial system, according to The Times.

One of the banks that is already offering cryptocurrency purchase and custody services to its clients is the Spanish BBVA. The entity chaired by Carlos Torres provides services related to bitcoin and ethereum from its headquarters in Switzerland.

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The BoE, notes the aforementioned publication, have faced “challenges” in finding data on cryptocurrency holdings by institutional investors. In this sense, the institution requires international cooperation. “The ability to obtain data on institutional investors is a challenge that the UK cannot solve on its own,” says the bank.

Bank of England, crypto and banks

Last week Andrew Bailey, Governor of the Bank of England, warned of the need for banks and other regulated financial firms to be wary of “volatile crypto assets.” At least, until regulators set new rules, Bailey said.

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The UK’s top financial institution understands that regulation of crypto assets will balance risk management with the need to support innovation and competition. The BoE claims that although no major British banks have reported direct exposure to crypto assets, some are beginning to offer crypto asset derivatives trading. In addition to custodial services, Reuters reports.

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Risk to financial stability

The cryptocurrency market has multiplied by ten since the beginning of 2020. Currently, its capitalization reaches $ , equivalent to 1% of global financial assets, according to BoE. Bailey believes that this number is probably not a risk to financial stability today, but it has all the ingredients to be.

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In Britain, 2.3 million adults own crypto assets like bitcoin, accounting for just 0.1% of household net financial wealth. The Financial Conduct Authority (FCA), which has issued serious warnings on several occasions about the risks of investing in crypto assets, considers that such investments should not be protected by the country’s Financial Services Compensation Plan.

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