Bank of England's Financial Policy Committee says crypto-asset markets are growing rapidly, but provide a little risk to the United Kingdom financial stability.
To address future risks, "regulation must develop quickly enough" at the national and global levels, the central bank said.
Its Financial Policy Committee pledged to closely monitor crypto assets, including their relationship with the British financial system.
Crypto enthusiasts may be pleased that the Financial Policy Committee's crypto commentary ends on a warning, even though it appears to be an optimistic view on the industry.
It is important that financial institutions maintain a prudent and cautious approach to any adoption of these assets,” the Financial Policy Committee said.
A series of stern statements on crypto was earlier issued by the Financial Conduct Authority -the UK's financial watchdog.
The Financial Conduct Authority, which regulates the financial sector, listed five legitimate concerns in January.
In addition to a lack of consumer protection, high price volatility, complex products, fees and charges, and misleading marketing materials, the British regulator expressed concerns. According to the regulator, consumers should be prepared to lose all their money if they invest in these types of products.
FCA's concerns are understandable, especially since it saw a 222% increase in inquiries about cryptocurrency scams between April 2020 and March 2021.
Another public dispute erupted between the regulator and Binance, one of the crypto industry's most popular exchanges.
In response, the FCA asserted that Binance's UK-based affiliate Binance Markets Limited could not operate as a regulated entity because it had not provided the necessary information to the agency.