Bank of England deputy governor Sir Jon Cunliffe has revealed that the British central bank plans to step up its efforts to regulate crypto-currency trading with new laws. “We should think about regulation before it becomes part of the financial system and before we can have a potential systemic problem“, he stressed.
Sir Jon Cunliffe on the regulation of crypto-currencies
Sir Jon Cunliffe, the Bank of England’s (BOE) deputy governor for financial stability, spoke about crypto-currencies in an interview with Sky News on Thursday. He explained that the British central bank plans to step up its efforts with new laws to regulate crypto-currency exchanges following the collapse of the FTX crypto-currency exchange.
“Crypto asset trading wasn’t big enough to destabilize the financial system, but it was starting to develop links“, said Jon Cunliffe, elaborating:
We had banks and investment funds and others who wanted to invest in it and I think we should think about regulation before it gets into the financial system and before we can have a potential systemic problem.
The deputy governor of the Bank of England noted that crypto-currency trading should be regulated rather than banned.
While warning that many coins were little more than a “bet” and that most were “without intrinsic value“, he admitted: “There are people who want to get into this business.” The BOE official elaborated, “Provided they do it with their eyes wide open in a safe place that is not filled with money laundering or illicit finance … then we should at least give them the opportunity to do it.“
Jon Cunliffe opined:
If we’re talking about creating regulation where people can see if they can develop services that have benefits using these technologies for the real economy … then I think there’s a real benefit for the UK.
However, he cautioned, “If we’re talking about using these crypto technologies to create, essentially, crypto assets that have nothing behind them … I don’t think there’s ever going to be a sustainable financial business around that.”
In November, Jon Cunliffe said the collapse of the FTX crypto exchange underscored the urgent need for stricter crypto regulation. The head of the Bank of England has regularly warned about the danger of crypto-currencies. In July, he stated that crypto is “prone to collapse“. He also expects the industry to face tough times as the Federal Reserve continues to tighten financial conditions.