Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe says the collapse of cryptocurrency exchange FTX has highlighted the urgent need for tougher crypto regulation . “We must not wait until it is big and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilizing impact,” the Deputy Governor said.
Bank of England’s Cunliffe on FTX’s Collapse and the Need for Crypto Regulation
Sir Jon Cunliffe, the Bank of England’s Deputy Governor for Financial Stability, shared his views on the collapse of cryptocurrency exchange FTX and the need for tougher crypto regulation during a Warwick Business School event on Monday.
Citing “last year’s crypto winter and last week’s FTX implosion,” Cunliffe detailed:
While the crypto world…is not currently large enough or interconnected enough with traditional finance to threaten the stability of the financial system, its ties to traditional finance have grown rapidly.
FTX filed for Chapter 11 bankruptcy on November 11. The exchange owes its 50 largest creditors nearly $3.1 billion.
The Bank of England Deputy Governor added that FTX’s failure underscored the need for regulators to establish tighter controls as soon as possible. Referring to the crypto industry, Cunliffe pointed out:
We should not wait until it is big and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilizing impact.
Crypto companies operating in the UK are currently regulated by the Financial Conduct Authority (FCA). Additionally, the UK government is finalizing new Financial Services and Marketplace Acts that will introduce regulations for stablecoins and the trading of crypto assets.
Additionally, Cunliffe added that the UK Treasury would soon begin consultations on extending investor protection, market integrity and other regulatory frameworks covering the promotion and trading of financial products to activities and entities involving crypto assets. In July, the Bank of England said it needed crypto improved regulatory and enforcement frameworks.
The Bank of England executive concluded:
Our aim is to ensure that innovation can take place, but within a framework in which the risks are properly managed… The events of the past week provide a compelling demonstration of why this matters.
Cunliffe has previously warned that the crypto is “likely to collapse”, noting that its prices could fall to zero. He also warned that cryptocurrencies will see difficult moments as the Federal Reserve tightens financial conditions.
What do you think of Bank of England Deputy Governor Sir Jon Cunliffe’s comments? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.