There are huge lessons to be learned from FTX and cryptocurrencies. The Deputy Governor of the Bank of England said in a recent speech at Warwick Business School that the experience of the past few months shows that crypto is very vulnerable to the risks that the law of the traditional financial sector should prevent.
Jon Cunliffe, the deputy governor of the BOE for financial stability, reiterated his position on the need to regulate cryptocurrencies, especially at the end of FTX.
Cunliffe highlighted the growing connection between regular banking and crypto trading and emphasized the urgency of managing crypto before it can disrupt the broader financial infrastructure. In an interview with Sky News, Cunliffe said that cryptocurrency is a “bet” that will be assessed in the same way as other services in the financial industry.
The FTX Disaster Highlighted the Need for Crypto Oversight
The official BOE warned that cryptocurrency trading is “high risk” if not called to work in the system of supervision and can have “systemic problems” if nothing is done. “I think it’s a bet, but we allow people to bet, so if you want to participate, you should be able to do it in a controlled environment in the same way controls the casino.”
Regulators and governments have yet to issue clear guidelines on whether and how to regulate cryptocurrencies.
Some have said that the department will be left as it is – in its “decentralized” nature without government assistance, because this will support a company that does not have direct risks and financial strength. Cunliffe said, however, that trading in crypto-assets does not pose a significant risk that could disrupt financial institutions, but it is beginning to be integrated into the financial system.
The governor said then a month after the sudden collapse of the cryptocurrency exchange FTX, which sent shockwaves through the cryptocurrency landscape and dealt a blow to the big business and money.
UK As The Leading Crypto Industry
More than a million investors were unable to withdraw their investments worth up to $8 billion due to the failure of FTX.
Former FTX CEO Sam Bankman-Fried surrendered to US prosecutors on Wednesday by authorities in the Bahamas, where the crypto exchange’s headquarters are located, and where he was held for eight days. A federal judge in New York ruled the next day that Bankman-Fried will be released on $250 bail pending trial on fraud and other criminal charges.
So far, the UK authorities have not been able to force acceptance on international crypto exchanges. In April, when he was Chancellor, Rishi Sunak, now the Prime Minister of Britain, announced the goal for the government to make the UK a “world center for crypto assets” – a vision based on principles and strong laws.
The use of cryptocurrency has exploded in recent years in the UK. In fact, in 2021 there will be about 10 million cryptocurrency in the country, from 1.5 million in 2018.