Crypto Market Is Too Dangerous to Remain Unregulated – Bank of England


The FTX collapse is proving to be a major catalyst for crypto regulation across the globe. The Bank of England is the latest central bank to signal greater efforts to regulate the industry.

The Bank of England is considering sweeping crypto regulation to protect investors and the financial system, Deputy Governor Jon Cunliffe said in an interview on Thursday.

“We should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem,” he said.

Deputy Governor Cunliffe pointed out that if FTX were a traditional financial institution, depositors would have had more protection.

“We saw things like clients’ money appears to have gone missing, conflicts of interest between different operations, transparency, audit and accounting,” he said. “And as a result, I think a lot of people have lost a lot of money.”

Bank of England also has to ensure that any risks in the crypto space don’t impact the financial industry, Cunliffe said.

"This trading of crypto assets was not big enough to destabilize the financial system, but it was starting to develop links with the financial system," he said.

“I don’t know how that will develop. But we had banks and investment funds and others who wanted to invest in it. I think we should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem,” he concluded.

Crypto Is Riskier Than Gambling – BoE Deputy Governor

Deputy Governor Cunliffe also said that regulation is required to protect investors in the incredibly volatile crypto industry.

"There's a lot of activity that's developed over the last ten years on the trading and sale of crypto assets, assets without any intrinsic value, so they're incredibly volatile. And all of that has grown up outside of regulation," he said.

Cunliffe also compared crypto trading to a casino, with the difference that casinos are more regulated.

“It is in effect, in my view, a gamble, but we allow people to bet,” he said. “If you then want to get involved in that you should have the ability to in a place that is regulated in the same way that if you gamble in a casino it’s regulated. You should have the full information on the tin as to what you’re doing,” Cunliffe added.

FTX Collapse to Usher in More Crypto Regulation

Cunliffe’s recent statement echoes his earlier comments on regulating crypto after the FTX collapse. FTX was one of the biggest crypto exchanges in the world. Its collapse sent shockwaves through the crypto industry, prolonged the crypto bear market and caused the collapse of major crypto firms.

Moreover, the FTX collapse made regulators across the globe prioritize the need to regulate the crypto industry. Several regulators are signaling that they are starting to monitor crypto markets more closely.

For instance, the U.S. Securities and Exchange Commission said on Friday that it will place increased scrutiny on crypto audits. The move comes after Binance’s audit earlier this month left many questions unanswered.

Earlier this month, the SEC said that companies should disclose the crypto assets they hold. This is to make sure that investors are aware of any exposure these companies have to the FTX collapse or the crypto market in general.

Crypto regulation signals that the industry is maturing. This means more institutional investors will join the crypto party and potentially push prices upward.



Source link: https://dailycoin.com/crypto-market-is-too-dangerous-to-remain-unregulated-bank-of-england/

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