Bank of England Warns of Crypto Spillover to Mainstream Markets

Bank of England Warns of Crypto Spillover to Mainstream Markets

The Bank of England (BOE) has warned of the threat of crypto “spillovers” to mainstream financial markets in its latest bi-annual Financial Stability Report.

  • In the report published Tuesday, the U.K. central bank pointed to bearish conditions in the crypto market since May that have seen the price of bitcoin fall by around 50%.
  • Despite "spillovers to broader financial markets" from crypto being limited, the BOE said the growing interest in cryptoassets by institutional investors, banks and payments operators is a concern.
  • "These developments could increase the interlinkages between cryptoassets and other systemic financial markets and institutions," the report said.
  • Crypto exposure among financial institutions has been highlighted as a threat previously, with the Bank for International Settlements' Basel Committee suggesting last month that banks should set aside capital to cover losses in full.
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