The Bank of England has published its Financial Stability Report, which calls for greater regulation of the crypto-asset sector. The Financial Stability Report (FPC) noted that the crypto crash was similar to past events in the traditional system.

These include fire sales and leverage amplifying price falls. Additionally, it highlighted the need for regulation of stablecoins, with work already in progress both domestically and internationally. Smaller stablecoins will be governed by amended e-money legislation, similarly to Europe’s MiCA legislation.

There is an interest in designing a guarantee scheme for stablecoins similar to that available to bank account holders. However, the Bank considers that will be tricky and take time. That’s because there will be a small number of systemic stablecoins, making it harder to pool risks.

And there’s no desire to mix any stablecoin backstop with the banking system’s compensation scheme.