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My take on the UK apex bank’s opinion on crypto assets and DeFi and its move to regulate the crypto industry.
Following the recent release of a 40-page report by the Financial Policy Committee (FPC) of the Bank of England, I decided to put my pen to paper in the form of a review – or should I say an analysis of the opinions and thoughts of the UK’s apex bank on crypto assets and DeFi.
Having said that, this is a review article, and I hope to make it as simple as possible for those who may find it cumbersome to go through the forty-page article. I will be reviewing the report based on the various headings raised in the report, and it will not be a comprehensive review per se – but I will review statements that stand out to me in the body of work.
So, just a heads up, this article is subjective and is colored by the lens of what I consider to be “standout-ish.” Without further ado, let’s dig in. I bet you will learn a thing or two by the time you get to the last sentence.
What is the role of crypto assets and DeFi in the financial system?
Now, for proper understanding of the review and the report if you decide to read it later, the report focuses on the UK’s financial system, which may be different from other systems.
Crypto assets – unbacked and volatile?
The FPC’s view of crypto assets is as unbacked, non-replicable strings of computer code that have no intrinsic value. According to their assessment,
“Currently, the vast majority of crypto asset activity is driven by the use of highly volatile, unbacked crypto assets as speculative investment assets.”
Being unbacked, which has led to high volatility, has been a major downside for cryptocurrencies, in my opinion. I mean, you can be a millionaire today and wake up to an empty wallet tomorrow. The number of crypto assets out there is growing by the day. Each day sees a new NFT (non-fungible token) project launched, a new ICO (initial coin…
