Deputy Governor Of The Bank Of England Called For Immediate Crypto Regulation

Latest Updated on 28 February 2023
The Deputy Governor of the Bank of England, Sir Jon Cunliffe, commented on cryptocurrency laws while giving an address at a conference in Coventry. Initially, the official was going to address central bank digital currency and stablecoins. Instead, in light of recent developments, he shared his opinions on the broader Crypto Business.

The most spectacular crypto failure The collapse of the Bahamas-based cryptocurrency exchange FTX was called "the most spectacular failure in the crypto ecosystem" by Sir Cunliffe. He argued that since they spread potential conflicts of interest between the main organization and its affiliated companies, central exchanges resemble conglomerates. It was FTX and Alameda Research in this case.

Added Sir Cunliffe:

“Regulation imposes requirements and limits on the Relationships between a Financial Business and its affiliates and also requires the fitness and propriety of controllers. Transparency in Business Structures and their interaction is the central tenet in this regard.”

He argued that the cryptocurrency market is unregulated. As a result, it is vulnerable to dangers that can be reduced by adopting laws that are similar to those used by businesses engaged in conventional finance.

The Deputy Governor made it clear that he was unsure if blockchain software protocols would minimize the dangers connected with lending, trading, and clearing unregulated services.

Sir Jon Cunliffe underlined the need for proper regulation in the interest of financial stability, consumer protection, and responsible technological innovation.

He stated that the Central Banks were looking at other methods of adopting cryptocurrencies because of events like the failure of FTX. This includes the issuing of a Pound sterling with a native Digital Element.

UK regulation of cryptocurrencies The Bank of England was working with the Financial Conduct Authority and His Majesty's Treasury to create a regulatory sandbox, according to deputy governor Cunliffe. Developers will thus explore how industry risks might achieve the required degree of confidence.

The laws governing cryptocurrency payment systems will be reviewed by the Financial Services and Markets Bill, which is currently being reviewed by the UK Parliament.

Last Updated on 15 October 2021

According to the deputy governor of the Bank of England Sir Jon Cunliffe, cryptocurrency regulation is a "matter of urgency." Crypto technologies, on the other hand, do not currently constitute a threat to financial stability. He cautioned that a potential bitcoin crash might spread through markets. If the value of crypto-assets plummets to zero, investors who have taken on debt with brokers may be forced to find funds to pay them back. Most crypto-assets, such as Bitcoin, are not backed by assets or commodities in the real world. They are essentially strings of computer code that account for 95% of the $2.3 trillion. As a result, he claims, they are volatile.

Crypto assets have surged in value by roughly 200 percent in the last year, from just under $800 billion (£580 billion) to $2.3 trillion (£1.7 trillion). While this may seem insignificant in the context of the $250 trillion global financial systems, Sir John claims that the subprime sector, which was valued at $1.2 trillion at the time, was the catalyst for the 2008 financial catastrophe.