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Massive selloff resulting in a market crash provided yet another reason for financial watchdogs to put crypto within regulations
It seems like what was feared is happening, ironically for both crypto opponents and its supporters, but implying different senses. This discussion dates way back to the emergence of cryptocurrencies and whether they should be put under the regulations or not. Both crypto supporters and proponents have their opinions and arguments to prove their points logically correct. But some incidents sometimes end up giving one side more leverage than the other.
For instance, the recent market crash could be a valid and strong reason for those who demand to put crypto under surveillance. However, such instances have been witnessed recently where authorities have seen either taking steps or thinking to take some actions to bring crypto regulations.
A fresh example of this came when recently, the Financial Policy Committee of the Bank of England invoked detailed crypto regulations to make sure of dealing with the potential risks involved in the cryptocurrencies. It is quite easy to understand that this action of the financial watchdog’s committee could have come in the wake of the recent market downturn.
In a statement, the Financial Policy Committee noted that although cryptocurrencies might not be a great threat to the traditional financial system and county’s economy, it’s important to keep a check on them given their anticipation and possibility of integrating with conventional mainstream finance. Along with these thoughts during the meeting on Tuesday, the committee also clarified its focus on the role of the Central Bank towards bringing financial stability and maintaining it further.
Lately, several incidents have taken place in the wider crypto market, including the collapse of the Terra ecosystem, following its algorithmic stablecoin UST depeg from the US dollar. Then a massive selloff created extreme market conditions, and the crypto market lost more than $2 trillion of its value. That further led to crypto firms like Celsius Network crypto lending platform and Babel Finance halting operations that prevented users on the platforms from withdrawing their crypto holdings.
Recalling these instances, the Bank of England stated in its Financial Stability Report that such mishappenings require far better-detailed regulations and frameworks that would enforce the existing laws on crypto assets. These steps would bring crypto markets under their radar, and keeping an eye on the developments and activities in crypto markets would become easy for them.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
