Cryptocurrencies don’t require action beyond monitoring, despite becoming more interlinked with big investors, according to the Bank of England (BoE).
According to market intelligence from its twice-yearly Financial Stability Report (FSR), crypto assets are largely held by retail investors. It says that institutional investors only have limited exposure at the present.
Despite current numbers, the report details “growing interest in crypto assets and related services from institutional investors, banks, and key payment system operators.” It says that these developments in particular could increase the interlinkages between crypto assets and other systemic financial markets and institutions. This could lead to a potentially higher risk in the longer run.
The report also highlighted major events for cryptocurrencies over the past year. This includes Bitcoin’s 6-fold appreciation going into April 2021. However, it also noted Bitcoin’s substantial selloff going into May. This affected other cryptocurrencies, but had a limited spillover effect to broader financial markets.
This tremendous rise and fall demonstrates that volatility is still an Albatross for cryptocurrencies. Although in this instance it seems that this volatility led to “potential pockets of exuberance”, according to the report. BoE Governor Andrew Bailey had a similar premonition about the “huge enthusiasm” behind Bitcoin and cryptocurrencies.
Other crypto in the UK
Other events regarding crypto have taken place in the UK recently. As part of an investigation into money laundering, British police seized GBP 294 million worth of cryptocurrency ($408 million). London police said they seized GBP 180 million of an undisclosed cryptocurrency. This came less than three weeks after seizing an additional GBP 114 million on June 24. Both seizures are part of a larger money laundering investigation expected to last for months to come, according to Detective Constable Joe Ryan.
Meanwhile, the money laundering investigation is playing on in the midst of a wider crackdown on cryptocurrencies in Britain. Last week, UK’s Advertising Standards Authority (ASA) started cracking down on misleading marketing for crypto investments. It will seek out and take down any misleading or irresponsible crypto advertisements, particularly for online and on social media platforms.