Bank of England Seeks More Funds to Scale up Crypto Scrutiny
The United Kingdom’s central bank, the Bank of England (BOE), is looking to raise over $400 million from commercial banks under its purview, to increase scrutiny on cryptocurrency.
BOE Keen on Monitoring Crypto
According to a Bloomberg report, the BOE’s Prudential Regulation Authority (PRA) wants to raise £321 million ($412 million) from financial institutions the central bank regulates. The fund will be used to expand its workforce by an additional 100 employees, and increase its monitoring of the cryptocurrency industry.
The report noted that the funds will be raised this year through February 2022, while adding that it is an eight percent increase from what was generated back in 2021. Also, the PRA is working towards developing an international crypto regulatory framework, and “will ask firms to report their cryptoasset exposures, treatments and future investment plans.”
The BOE is concerned that the nearly $2 trillion cryptocurrency market has grown big enough to threaten the country’s financial system. Earlier in February, the Financial Stability Board (FSB), a Swiss-based international organization that monitors the global financial system, also expressed a similar sentiment.
According to the FSB, the booming cryptocurrency industry and the increased interconnection between the traditional finance sector and crypto could possibly harm the global financial economy.
Although the value of the cryptocurrency market is a drop in the ocean compared to the overall financial system, more regulatory bodies believe a policy framework is necessary for the burgeoning crypto industry, to curb any potential risks.
In the United Kingdom, the FCA maintains a strict oversight over crypto businesses operating in the country. As reported by crypto.news in March, the UK regulator revealed that it opened over 300 probes involving unregistered cryptocurrency firms, adding that there were “50 live investigations, including criminal probes, into unauthorized businesses.”
Central Banks Still Wary About Crypto Industry
Like the BOE, most central banks globally are skeptical against crypto and have continuously issued several warnings against investing in the sector.
The Central Bank of Ireland recently said that it may not permit investment funds to offer direct exposure to cryptocurrencies. The Irish apex bank said that crypto assets are risky and speculative, and maybe dangerous for even experienced investors.
In March, the Bank of Thailand placed a ban that would prevent businesses from accepting cryptocurrency payments, which would be implemented in April 2022. The central bank cited money laundering, lack of crypto regulation in Thailand, and price volatility as some of the reasons for the ban.
While central banks are yet to embrace crypto, digital sovereign currencies continue to see adoption globally. Over 80% of central banks globally are exploring CBDCs at different levels. The Bahamas became the first country in the world to launch its digital currency called Sand Dollar, while Nigeria’s central bank is the first in Africa with its e-naira.
In the United States, some lawmakers proposed the Electronic Currency and Secure Hardware (ECASH) Act, which will empower the Secretary of the Treasury to develop a non-blockchain-based digital dollar. Russia is also planning to use the digital ruble for international payments in 2023.
