The Bank of England (BoE) has initiated its work on the country's first regulatory framework for cryptocurrencies, Reuters reports, citing the BoE's Financial Policy Committee (FPC).
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Even though the market is relatively small, the financial regulator is afraid of risks that might be substantial to financial stability in future. The BoE's Financial Policy Committee said:
"While cryptoassets are unlikely to provide a feasible way to circumvent sanctions at scale currently, the possibility of such behaviour underscores the importance of ensuring innovation in cryptoassets is accompanied by effective public policy frameworks to [...] maintain broader trust and integrity in the financial system."
Although the BoE did not explain how it plans to regulate the nascent market of the digital economy, the FPC noted that regulation should be based on "equivalence," adding that crypto firms that provide financial services are subject to the same the same laws that applicable to the banking industry.
Earlier in March, the UK's National Crime Agency called on the local authorities to regulate sophisticated mixing technology used by criminals also known as mixers. Gary Cathcart, Head of Financial Investigation at the NCA, said mixers can be used to "provide a 'layering' service, churning criminal cash, obscuring its origins and audit trail, similar to how a cash business might be used by criminals to legitimize cash through the banking system."
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