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    Bank of England issues regulatory framework for cryptos

    Bank of England issues regulatory framework for cryptos

    Bank of England issues regulatory framework for cryptos
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    By CNBCTV18.com  IST (Updated)

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    The Bank of England report released last week mostly follows the existing regulatory framework as means to mitigate risks that come with crypto technology in traditional finance. The Financial Policy Committee (FPS) also embraced the Treasury's proposal to regulate stablecoins, bringing banks into that process. Treasury's proposal was in favour of accommodating international efforts to regulate DeFi applications.

    With the growing popularity of cryptocurrency, central banks around the world are expediting the regulation of the booming industry. And the latest to jump on the bandwagon is the UK’s Bank of England.
    Last week, the Bank of England published reports on financial stability relating to crypto-assets and decentralised finance (DeFi). The Financial Conduct Authority (FCA) and the bank's Prudential Regulation Authority (PRA) also released documents simultaneously that reference one another.
    "Where crypto technology is performing an equivalent economic function to one performed in the traditional financial sector, the FPC judges that this should take place within existing regulatory arrangements and that the regulatory perimeter be adapted as necessary to ensure an equivalent regulatory outcome," said Bank of England's Financial Policy Committee in a statement, according to altfi.com.
    The report released last week mostly follows the existing regulatory framework as means to mitigate risks that come with crypto technology in traditional finance. The Financial Policy Committee (FPS) also embraced the Treasury's proposal to regulate stablecoins, bringing banks into that process. Treasury's proposal was in favour of accommodating international efforts to regulate DeFi applications.
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    The FCA notice released reminded regulated firms about their "existing obligations when interacting with or exposed to crypto-assets and related services." The notice specifically honed in on the point of "being clear with customers" on regulation and risk.
    The FCA notice also gave special attention to Anti-Money Laundering (AML) rules and registrations. The FCA pointed out a substantial list of unregistered crypto-asset businesses in the country. They set a deadline for unregistered and temporarily registered crypto businesses to formalise their existence. Companies have till March 31 to register. If they do not register, they can face the possibility of being shut down by regulatory agencies.
    Crypto regulation mania
    In the past few months, a host of countries have formed some kind of regulatory structure to govern the burgeoning asset class. The Indian government recognised cryptocurrencies too and imposed a flat 30 percent tax on profits from digital assets beginning in April.
    Earlier this month, US President Joe Biden released the long-awaited cryptocurrency and digital asset executive order, which has received mostly positive reactions from industry veterans. Dubai also adopted its first cryptocurrency regulation and established a governing body to oversee the industry.
    El Salvador has even adopted Bitcoin as a legal tender and citizens can use it to complete everyday transactions. Several nations are also working on their Central Bank Digital Currency (CBDC) projects, with China already carrying out a pilot program for its CBDC in certain provinces.
    Therefore, as more and more countries move toward crypto regulation, it seems like the industry is finally getting its recognition as a true asset class, and not just a passing fad or a speculative bubble that will burst soon.
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