On Thursday, the Financial Policy Committee of the Bank of England disclosed that they are working on developing a regulatory framework for digital assets. The central bank also made a reference to the sanctions that have been imposed because of the war between Russia and Ukraine in the statements. Bureaucrats and financial regulatory authorities all over the world have become increasingly concerned in recent times that Russia could take advantage of crypto assets to bypass the economic sanctions that have been imposed. The press statement of the BOE said that it was unlikely for crypto assets to provide Russia with a feasible way to get around sanctions at a large scale for now, but there was a possibility they could do so.

Therefore, it is a must to ensure that there are effective public policy frameworksthat can accompany innovation in crypto assets for maintaining the integrity and trust in the financial system. The crypto economy has been highly criticized by some members of the Bank of England for quite a while. Last year in mid-November, Andrew Bailey, the Governor of the Bank of England, had expressed his concerns about the adoption of bitcoin as legal tender in El Salvador. Sir Jon Cunliffe, the deputy governor for financial stability for the central bank, said in the following month that prices of crypto assets could drop to zero.

On Thursday, the report of the FPC talked about financial stability. The committee of the central bank noted that the FPC is assessing the risks to the financial system’s stability and it has concluded that these are currently limited. This is because their size remains limited for now and they are not that connected with the wider financial system. However, the FPC said that if they continue to grow at the same pace, and if they become interconnected with the overall financial system, then these crypto assets could pose a risk to the stability of the financial system.

Since the conflict between Russia and Ukraine began, politicians and lawmakers all over the globe have been discussing, developing, or even proposing laws aimed at regulating and researching digital currencies. The FPC’s statements on Thursday show that the BOE wants to classify crypto assets in the same category as it does traditional financial assets. Not only does the FPC plan on developing a regulatory framework that would govern digital assets, it has also mentioned stablecoins.

The FPC said that a major stablecoin that does not have a reliable deposit guarantee could turn out to be a risk to the UK’s financial system. According to the committee, if they introduce a systemic stablecoin, which is backed through a deposit mad with a commercial bank, it would result in significant risks to the stability of the financial system. All of this talk about crypto has been brought forward because of the Russian-Ukraine conflict and the possibility of the former using cryptocurrencies to evade the tough economic sanctions that have been imposed by Western nations due to its actions.

In terms of the value of assets under management (AUM), Grayscale Investments is the largest digital currency asset, manager. It has now announced that it is introducing a smart contract fund that comprises of competitors of Ethereum (ETH). There are seven different smart contract coins in the fund, which has been named ‘GSCPxE’ and it is the 18^th investment product that the asset management firm has launched up till now. It is important to note that while the fund is spread out across the landscape of smart contract tokens, it excludes the largest smart contract token out of the equation i.e. ether (ETH).

Therefore, it is named as the ‘Smart Contract Platform Ex-Ethereum Fund’. To put it simply, smart contracts can be used for programming blockchains by the users and the market valuation of all the smart contract coins that exist today is worth $669 billion. The largest smart contract platform is none other than Ethereumbecause it has a market capitalization of $360 million. This is about 53.81% of the total valuation of smart contracts platforms. The announcement by Grayscale on Tuesday shows that it has chosen to add seven smart contract tokens to its fund. The coins that are included are 4.06% stellar (XLM), 4.27% algorand (ALGO), 9.65% polygon (MATIC), 16.16% polkadot (DOT), 16.96% avalanche (AVAX), 24.27% Solana (SOL) and 24.63% Cardano (ADA).

It is the 18^th investment product to have been introduced by Grayscale, but it is also important to note that it is the third diversified fund offering to have been launched. According to the digital asset management company, the fund is open to institutional accredited investors and eligible individuals. Moreover, while Grayscale has disclosed the existing fractions of the respective smart contract coins, it has added that the weightings and holdings can change. The announcement from Grayscale also revealed that the fund would use the Coindesk Smart Contract Platform Elect Ex ETH Index.

Michael Sonnenshein, the chief executive of Grayscale, said on Tuesday that there has been an increase in digital currency diversification. The CEO said that the crypto ecosystem’s ongoing evolution has resulted in the increase in demand for diversified exposure. He said that while the growth of the digital economy relies significantly on smart contract technology, it was still too early to determine which platform would emerge as the winner. This would be in terms of scalability, flexibility, the high-speed of the platform as well as retaining and attracting strong developer communities.

According to Grayscale’s CEO, the good thing about their GSCPxE fund is that people don’t have to go with just one winner. Instead, the fund provides them with the opportunity of using a single investment vehicle for accessing the development of the entire smart contract ecosystem. The introduction of this fund comes after the company added 25 more crypto assets at the end of January to its investment products. The total AUM of the asset manager is close to $40 billion. In the first week of February, Grayscale had also launched an ETF with Bloomberg named Grayscale Future of Finance ETF (GFOF).