Great Britain will stop taking action against the “crypto pocket” with immediate effect

The Bank of England’s (BoE) latest financial stability report, released twice a year, confirms that the increased crypto trades and price volatility in 2021 signals that this field contains “ample potential”.

The report notes that the top cryptocurrencies on the market, Bitcoin (BTC) and Ether (ETH), saw strong appreciation and depreciation in the 12 months to April 2021 as being “particularly volatile,” with prices as last Month down.

However, the central bank is relatively optimistic about the risks all of this poses to financial stability, noting that the spill-over of cryptocurrency prices to broader financial markets in 2021 will be limited. The fact that the cryptocurrency market remains relatively isolated and restricted to retail investors means the bank does not believe that the risks of the sector have crystallized, which ensures active intervention, BoE Deputy Governor Jon Cunliffe said .

The report summarizes the position of the central bank and possible changes in this position in the future and outlines:

“Market intelligence shows that the majority of crypto files are held by retail investors, with institutional investors currently having limited exposure. However, there are some signs of growing interest in cryptocurrencies and related services from institutional investors, banks, and large payment system operators. These developments could strengthen the connection between cryptocurrencies and other systematic financial markets and institutions. “

However, BoE Governor Andrew Bailey noted that the central bank is well aware that the sector and its relationship with the wider world of institutional finance are flexible and rapidly changing. This means that the BoE will continue to monitor him closely.

Related: BoE addresses “tough and niche issues” related to digital currency

The UK has started to take a more interventionist approach to parts of the crypto sector, with the country’s Financial Conduct Authority recently ordering that major crypto exchanges on Binance cease all regulated activity in the country.

Large and rapid changes in the private currency landscape – including cryptocurrencies – also led Cunliffe this year to argue that universal access to a central banking form of digital currency could become important for future financial stability.