On Thursday, the Bank of England started to outline Britain's first regulatory framework for cryptoassets.

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In a 39 page document released, the BoE's Financial Policy Committee (FPC) pointed out that while the crypto market is still relatively small, it could eventually pose a threat to the overall financial sector.

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"While cryptoassets are unlikely to provide a feasible way to circumvent sanctions at scale currently, the possibility of such behaviour underscores the importance of ensuring innovation in cryptoassets is accompanied by effective public policy frameworks to... maintain broader trust and integrity in the financial system," the FPC said.

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As decentralized finance (DeFi) continues to become more popular, the FPC believes all crypto activities that mirror conventional financial services, including exchanges, lending, and insurance, should be governed by existing rules and standards.

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“Where crypto technology is performing an equivalent economic function to one performed in the traditional financial sector, the FPC judges that this should take place within existing regulatory.”
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