The FTX collapse exemplifies that cryptocurrency is too dangerous not to regulate.
BoE's Deputy Governor noted that cryptocurrency could become a systemic risk for the entire financial industry.
Jon Cunliffe said investors and the financial system require protection from the casino of crypto trading.
Filings of multiple exchanges, has increased the need for strict crypto regulation to oversee the crypto industry.
The aforementioned event has significantly weakened the trust of cryptocurrency investors. Not only investors but experts and regulators around the world are also calling for strict crypto regulation to prevent such occurrences in the future.
In line with this, BoE’s Deputy Governor Jon Cunliffe said in an interview on Thursday that the Bank of England is considering broader crypto regulation to protect investors and the financial system.
The Bank of England is the UK’s central bank, which offers monetary and financial stability to the citizens of the United Kingdom. The UK currently monitors crypto exchanges to ensure that they have effective anti-money laundering (AML) and terrorist financing procedures in place, but crypto assets themselves are not regulated.
Deputy Governor Cunliffe said, "we should think about regulation before it becomes integrated into the financial system and there is a potential systemic problem." He further added that depositors would have had more protection if FTX had been a traditional financial institution.
Cunliffe added "we saw things like clients' money appears to have gone missing, conflicts of interest between different operations, transparency, audit, and accounting. As a result, I believe many people have lost a lot of money."
The Deputy Governor asserted that the Bank of England also ensures that any risks in the crypto space do not have an impact on the financial industry.
Deputy Governor Cunliffe also stated that regulation is necessary to protect investors in the extremely volatile cryptocurrency industry.
"Over the last ten years, trading and selling of crypto assets, which have no intrinsic value and are therefore very volatile, has been very active. And it's all grown up outside of regulation," he said. Cunliffe also compared cryptocurrency trading to gambling, with the exception that casinos are more regulated.
This indicates that in the times to come, UK citizens may witness the enactment of strict crypto regulation governing the entire UK crypto industry.
If the United Kingdom enacts crypto regulations, it will increase transparency between crypto exchanges and users of the nation. The regulation will oversee the operations of crypto exchanges as well as the funds of users.
The UK government will add several other provisions to the regulation as well, which is currently unpredictable. As a result, we must wait for the regulations to be adopted by the UK government.
What are your thoughts on the views of the Bank of England's Deputy Governor Jon Cunliffe? Do you think the UK will enact crypto regulations in 2023? Share your thought in the comment section below.
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