The Bank of England says “extreme volatility” in the crypto market “underscores the need for enhanced regulatory and law enforcement frameworks.” The British central bank has warned that crypto prices could fall further.
The Financial Policy Committee of the British central bank, the Bank of England (BOE), said Tuesday that the “extreme volatility” in crypto prices in recent months underscores vulnerabilities in the crypto market, Bloomberg reported.
Citing a $2 trillion reduction in the total market capitalization of crypto assets, the Bank of England stressed the need for tougher law enforcement and regulation for the crypto sector, the publication conveyed. The market cap of all cryptocurrencies currently stands at about $1 trillion. It was nearly $3 trillion at its peak in November last year.
Warning that the crypto market could decline further, the British central bank said:
This underscores the need for enhanced regulatory and law enforcement frameworks to address developments in these markets.
While noting that the volatility in the crypto market is not currently posing a risk to the stability of the U.K. financial system, the central bank cautioned that systemic risks would emerge if crypto activity and its interconnectedness with the traditional financial system continue to grow.
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