Bank of England Says Britain to Front-Run Rules on Crypto

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In Brief
  • The Deputy Governor of the Bank of England stands by the recent rules from the Basel Committee of banking regulators regarding crypto assets.

  • Woods says he’ll usher in crypto rules if banks don’t have the proper capital backing.

  • Major banks around the world however, oppose the new rules.

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The Deputy Governor of the Bank of England said they would front-run rules from the Basel Committee on capital backing of crypto assets. 

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On Thursday, Sam Woods, the Deputy Governor, stated that his country would be the first to take on global rules regarding banks and crypto assets. This would be in avoidance of Britain’s banks gaining major exposure to crypto assets without sufficient capital backing. 

The rules which Woods refers to are those proposed by the Basel Committee of Banking Regulators. The Committee recently started the development of the regulations which could become the standard for major global banks. Moreover, these rules include disciplinary fees, which may prohibit lenders’ involvement in the crypto space. 

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According to these rules, major banks which hold crypto assets need sufficient capital backing relative to the amount of crypto. The Deputy Governor called these rules “quite sensible” and said that banks don’t have enough exposure to crypto. 

“We would not want to stop firms doing things that make commercial sense, but we would take a very conservative view on capital treatment, and if necessary, we would therefore front run, maybe not exactly in the same way, but we would put some capital measures in place,” Woods told Reuters.

Opposition to the Rules

While Woods himself is on board with the propositions out of Basel, some banks have a different opinion. Earlier this week, major lenders in the international financial scene sent a letter to the Committee in opposition to the potential rules. The opposition comes from the Global Financial Markets Association, which includes the likes of JP Morgan and Deutsche Bank. 

At the moment, the deadline for finalization of the rules is in January 2023.  However Woods says it’s unclear if this deadline is possible since “timetables are shifting”. 

This is a slight change of tone from previous crypto-centric comments out of England. Over the summer, the Bank of England commented that cryptocurrencies “only require monitoring” and need no further action. As global regulators ponder sweeping crypto regulations, the space remain in limbo. 

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Savannah Fortis is a multimedia journalist covering stories at the intersection culture, international relations, and technology. Through her travels she was introduced to the crypto-community back in 2017 and has been interacting with the space since.

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