On 24 March, the Bank of England published a report in its Financial Stability in Focus series, which sets out the Financial Policy Committee (FPC) view on specific topics related to financial stability. However, it does point out that activity is currently concentrated in cryptoassets, and is small compared to that of the overall financial sector. It warns that, as cryptoasset technology grows in importance, risks could potentially arise from: interlinkages between cryptoassets and the traditional financial sector; new forms of financial and operational risk for financial institutions; a growth in activity outside of the existing regulatory perimeter; and challenges in regulating new forms of entities and business models. The FPC is of the view that as cryptoassets and DeFi grow and develop, enhanced regulatory and law enforcement frameworks are needed, both domestically and at a global level. These frameworks should address developments in cryptoasset markets and activities, to encourage sustainable innovation, and maintain broader trust and integrity in the financial system .
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