Thursday 23 September 2021 3:26 pm

Bank of England considers tough rules on crypto

Bank of England Deputy Governor Sam Woods has warned he will consider tough new rules to prevent British banks building up extensive exposure to crypto assets.

Woods described controversial rules on crypto assets proposed by the Basel committee, the global standard setter for banking regulation, as “quite sensible” in comments to Reuters.

The rules, which would require Banks to hold capital in reserve equal to their bitcoin exposure, could prevent the majority of lenders from participating in the crypto space.

“At this point our banks don’t have material exposures to crypto but you can see over time, there is an investor appetite and not just retail, also institutional investor appetite to have a little bit of this stuff,” Woods said in comments to Reuters.

Woods added that the Bank of England was prepared to introduce rules on capital treatment which “front run” worldwide regulation. “We would not want to stop firms doing things that make commercial sense, but we would take a very conservative view on capital treatment,” he added.

During a speech yesterday titled “prudentist,” Wood hinted that the Bank of England is prepared to tighten regulation on new assets.

“I think we are just keeping pace with the world around us,” he said.

The news comes after multiple banks announced they are considering offering crypto exposure to clients on the back of growing demand.

In May Morgan Stanley became the first major bank to offer its wealth management clients access to bitcoin funds and the banking giant has since announced it is creating a new crypto research team.

Earlier this year the Bank of America corp created its own crypto research team and banking giant Citigroup recently announced it would offer investors access to Bitcoin futures trading products.

Read more: Morgan Stanley to launch new crypto research team led by Sheena Shah