The Bank of England announced yesterday that it would intervene if a stablecoin issuer showed signs of insolvency, which could have ramifications for the UK financial system or significant consequences for businesses and other interests.
There was an announcement some time ago that the British government desired to make the UK a crypto asset technology hub, and it was getting ready to welcome crypto startups that would bring upheaval and wealth to the country.
However, the Bank of England’s recent announcement regarding its intervention and supervising the collapse of any stablecoin may be viewed by some as a rather awkward attempt to grant itself the right to say what goes in the stablecoin market.
Although HM Treasury’s consultation document states that the central bank will only intervene if there is a “systemic” collapse, the definition also permits the bank to monitor a situation that has significant outcomes for businesses or other interests.
There is a lack of clarity regarding the extent of the suggested powers to be invested in the Bank of England, as well as who they are to be directed at, this is a possible concern for any crypto company looking to locate in the United Kingdom.
Having regulatory authorities who lack in-depth knowledge of the numerous sectors in the industry determine the best interests of crypto is bad enough, but having an institution like the Bank of England hold the reins when things go wrong is also unsettling.
The Bank of England is alleged to discuss with the UK regulator (Financial Conduct Authority) in order to obtain a special administration order granting it authority to act, according to the consultation document.
Both the Bank of England and the FCA have previously expressed their anti-crypto sentiments, with heavy-handed statements essentially warning investors to avoid cryptocurrencies.
Of course, investors require safeguards, and the Bank of England and the Financial Conduct Authority will be involved. The question is, how fairly will crypto companies be treated, and will they be treated the same as any other company in the traditional financial system?
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