Bank of England wants 9% fee increase from City of London firms to investigate crypto risks

The Bank of England is requesting a 9% increase in fees from firms in the City of London this year in order to fund research into emerging risks such as those with cryptocurrencies. 

Some in the City, which has witnessed a significant slowdown in business since the outbreak of the war in Ukraine, are sure to be outraged by the £24.3 million increase to £321 million, according to a report by the Evening Standard. 

The Bank of England says it needs 100 additional employees to investigate “new policy responsibilities” that have arisen as a result of Brexit. It also wants to keep an eye on the surge in crypto trading, which is typically dominated by novice investors. 

It has already been advised that banks should use “especially cautious” while dealing with crypto-assets such as Bitcoin.

Deputy governor Sam Woods said: 

“In order to deliver an expanded role as a rule maker and an increased focus on operational resilience, we will need to increase our resources this year with a budget that will allow us to employ around 100 more staff than last year’s budget.”

City executives are not happy with the Bank

City executives are already privately complaining that the Bank and the Financial Conduct Authority (FCA) are taking up much too much of their time doing surveys on a wide range of subjects. 

David Buik of Aquis Exchange stated: 

“Crypto-currency, Blockchain, and Bitcoin acolytes have begged the BoE and the FCA to play a leading role in regulating these new instruments, which have grown in popularity like wildfire. The authorities have taken their time to assume full responsibility and frankly it is a little rich to ask the market to pick up the inflationary tab. Frankly, why should it?”

In March, the Bank started developing the first draft of the United Kingdom’s regulatory framework for crypto assets, stating that although the industry was still small, its fast expansion might represent a threat to financial stability in the future if left unchecked. 

“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.”  according to the Bank of England’s Financial Policy Committee (FPC) statement.

As a result of fears that crypto may be used to avoid financial sanctions placed on Russia after its invasion of Ukraine, cryptocurrencies have once again come under the regulatory spotlight.