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

Fast facts

  • 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