Bank of England Says That Cryptocurrencies are Unsuitable for Payment

• The Bank of England has updated its stance regarding cryptocurrency regulation.
• A virtual meeting was arranged by Brooking Institute where the governor of the Bank of England, Andrew Bailey and many others elaborated their views on stablecoin regulation. 
• Bailey says that stablecoins require immediate global response as their popularity keeps on increasing.

Proper cryptocurrency regulation is something that many national banks are working on. Recently, the Bank of England has updated its stance regarding cryptocurrency regulation. A virtual meeting was arranged by Brooking Institute where the governor of the Bank of England, Andrew Bailey and many others elaborated their views on stablecoin regulation. 

Stablecoins Innovation is Gaining Popularity, Needs Immediate Global Response

Bailey says that stablecoins require immediate global response as their popularity keeps on increasing.  He had clarified that crypto assets like Bitcoin are not suitable to be used as payments for buying or selling things. It seems like BTC has failed to convince him that it can be a great investment option. This is because their value can fluctuate very quickly and to a very big extent. New innovations bring new regulatory challenges for high risk firms, which compromise their ability of providing a safe regulatory framework. 

Need for Quick Regulatory Actions on Stablecoins

Previously we have seen nations like Russia who have banned the use of cryptocurrency in exchange of products directly. The governor of the Bank of England has clarified that if stablecoins are to operate as a form of payment system then proper they must have similar regulations that are similar to the other form of payments and the money that are transferred through them. Moreover

the governor mentioned that the current stablecoin regulations do not have a provision for legal claim. Hence, stablecoins must have a proper framework that supports protection protocols and enables the coin holders to readily claim and convert stablecoin to 1-1 fiat currency. 

Central Bank Exploring the World of CBDCs

The senior regulatory lawyer at law firm Ashurst, Bradley Rice has said that the Central Bank and government mustn’t give up their authority over controlling the monetary policies and its reserve currency to the private sectors, especially if they are not located in the UK or are foreign based. He clarifies that this is a marathon which means they have a long way to go. The Central Bank has also started exploring the world of Central Bank Digital Currencies (CBDCs). In March it released some deep discussion papers regarding the potential of CBDCs to change payment systems. Back in June, L3COS, a blockchain based firm submitted a proposal to the Bank of England regarding a blockchain-based operating system that would back these CBDCs. 

Ritika Sharma

With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.