The United Kingdom crypto regulators and the Bank of England Financial Policy Committee are right now analyzing the total crypto situation of the country after the reports on decentralized finance and crypto assets have been published. On Thursday, BoE released their reports and simultaneously, other financial institutions of the country, such as the Bank’s Prudential Regulation Authority, or PRA and the Financial Conduct Authority, or FCA, also started to publish their reports which also referenced with each other.
FPC or the Bank’s committee, in their 40-page report, stated that decentralized finance (DeFi) and digital assets possess limited amounts of risk to the overall financial system of the UK. But as these assets are gradually becoming intertwined with the existing financial system, the risk potential is also increasing simultaneously. The FPC has promised to analyze those potential risks and give suggestions to the government of the UK.
The report has also stated that the existing regulatory framework is enough to reduce the risks if the crypto and blockchain technology serves the same purpose as the traditional financial services. Furthermore, the FPC has also welcomed the stablecoin proposal of the Treasury, including the involvement of the bank in the process. The organization has also demonstrated their support for the international involvement in regulating the DeFi.
FPC has suggested that financial organizations should take special heed while adopting any kind of approaches related to DeFi, cryptocurrency and crypto assets until the regulation has been properly administered. The CEO and Deputy Governor of the PRA, Sam Woods, have written letters to the insurance companies, banks and investment firms for the exposure of the crypto assets while referring explicitly to the FCA notice and FPC report.
