The Bank of England (BoE) called for stricter financial regulations on the back of the recent cryptocurrency crash in its Financial Stability Report released Tuesday.
See related article: Crypto crash justifies RBI’s stance: central bank chief
Risk is growing with the cryptocurrency industry’s expanding connection with the wider financial system, the U.K. central bank said.
“A number of vulnerabilities, including liquidity mismatches and over-leveraged positions, were exposed within cryptoasset markets similar to those exposed by past episodes of instability in more traditional parts of the financial system,” the BoE said in its report.
The BoE is the latest addition to a wider central bank crypto pile-on following Terra’s algorithmic stablecoin disaster.
Investor confidence in stablecoins has been shaken, the BoE added, especially those with riskier backings or with less transparency.
The central bank’s Financial Policy Committee expects stablecoins to meet the same stability and redemption standards as commercial bank money if used in payment systems.
See related article: Cryptocurrencies a clear danger: India central bank chief