Cryptocurrency: Bank of England calls for regulation

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Image Source: Outlook India

After the FTX cryptocurrency exchange failed, a top Bank of England official said that the financial system needs better rules to keep it safe.

Sir Jon Cunliffe said that digital currencies are still too small to be a threat, but that will soon change.

Last week, FTX went bankrupt because it owed its biggest creditors almost $3.1 billion (£2.6 billion).

There are also thousands of people waiting to get their money back.

Sir Jon, the Bank’s deputy governor for financial stability, also said that the recent changes in the value of cryptocurrencies were a threat.

Bitcoin, the most prominent digital currency in the world, has lost almost 70% of its value in the last year.

He said that the crypto world was not yet “big enough or connected enough to traditional finance to threaten the financial system’s stability.”

But he said that its connections with traditional finance were proliferating.

It comes as the Financial Services and Markets Bill, now in Parliament, will be passed. The bill will set rules for stablecoins. Crypto assets backed by a real asset, like a currency, and how crypto assets are sold.

Sir Jon said in his speech that the UK’s financial watchdog, the Financial Conduct Authority. He had been warning for a few weeks before FTX went bankrupt.

FTX didn’t have a permit to work in the UK, but its collapse has sent shockwaves worldwide.

After the company went bankrupt, its paperwork showed that it could owe more than a million people and businesses money.

FTX collapse exposed cryptocurrency

Before FTX went bankrupt, its CEO, Sam Bankman-Fried, said that his company was “the most regulated” in the industry.

FTX had, in fact, get a lot of permissions to work in many countries and offer many different crypto services.

In the end, though, those certificates didn’t do anything to protect customers or investors.

Every time there is a big problem in crypto, there are more calls for regulation, but the kind of regulation matters.

The main thing that worries the government is ensuring that crypto companies don’t go bankrupt and don’t steal people’s money.

But as always, there is a tension between safety and freedom with cryptocurrency.

Regulating crypto companies to ensure they are safe and responsible would bring them one step closer to the traditional financial system. Which crypto believers see as a huge no-no.

But no matter what the true believers want, the FTX chaos could be the point from which there is no going back.

On Saturday, FTX said it had started looking at its global assets and was getting ready to sell some of them.

Last week, John Ray, the new CEO of FTX, criticized the running of the failed crypto exchange. He said he had never “seen such a complete failure of corporate controls.”

Sam Bankman-Fried started the company, but Mr. Ray took his place. He complained that there needed to be more reliable financial information.

Mr. Bankman-Fried was one of the most well-known people in the crypto world. In 2021, the 30-year-old became a billionaire.

His FTX cryptocurrency exchange became the second largest in the world. Every day, $10 billion to $15 billion were traded.

It spent a lot of money on ads during the Super Bowl and bought the naming rights to the arena where the Miami Heat NBA team played.

Digital pound

Even though the collapse of FTX caused a lot of trouble in the crypto world. Sir Jon said that the Bank of England was still thinking about whether or not the UK needs its digital currency.

He said the decreasing role of cash and increasing digitalization of everyday life drove the work on a digital pound.

Read Also: FTX: Over a million people are owed money 

Sir Jon said that the Bank planned to put out a report with possible next steps around the end of the year.