By Marcus Soterio, analyst UK based digital asset broker GlobalBlock
Bitcoin is below its 2017 all-time high against the bulls. The collapse of LuNA and UST caused an unfortunate contagion among other crypto companies, as we saw liquidity leaving the crypto market at a different rate.
In the Bank of England’s Financial Stability Report on Tuesday, the bank’s Financial Policy Committee (FPC) spoke briefly about cryptocurrencies. The report notes that while crypto poses an immediate risk, it is important to keep an eye on it as several vulnerabilities have been exposed during the recent market downturn. The Bank has noted the following weaknesses.
“Liquidity imbalances lead to volatility and fire sales, and leveraged positions remain unaffected and prices rise. Investors’ confidence in the ability of some so-called ‘stablecoins’ to maintain their pegs has been severely weakened, particularly with no or risky backing and low transparency.
Unfortunately, the UK’s Financial Conduct Authority (FCA) is behind the curve. So far, 33 crypto companies have been licensed in the UK. The UK’s current regulatory trajectory puts the country at risk of falling behind the US, EU and other regions.
Last week, domestic regulators from the UK and US attended a meeting and acknowledged the importance of working together to strengthen regulatory outcomes for crypto while supporting innovation.
This is a step in the right direction, however, the UK has a lot of work to do if it is to achieve its goal of becoming a ‘global hub’ for crypto.