Bank of England Deputy Governor Sir Jon Cunliffe has revealed that the British central bank is planning to step up its efforts to regulate cryptocurrency trading with new laws. “We should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem,” he stressed.
Sir Jon Cunliffe on Crypto Regulation
Sir Jon Cunliffe, Bank of England (BOE)’s deputy governor for financial stability, talked about cryptocurrency in an interview with Sky News Thursday. He explained that the British central bank plans to step up its effort with new laws to regulate crypto trading following the collapse of crypto exchange FTX.
“Trading of crypto assets was not big enough to destabilize the financial system, but it was starting to develop links,” Cunliffe said, 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 becomes integrated with the financial system and before we could have a potential systemic problem.
The Bank of England deputy governor noted that trading in crypto should be regulated rather than banned.
While cautioning that many coins were little more than a “gamble” and most were “without intrinsic value,” he admitted: “There are people who want to engage in that activity.” The BOE official clarified: “Provided they do that with their eyes wide open in a place that is safe, is not full of money laundering or illicit finance … then we should provide them at least with the opportunity to do that.”
Cunliffe opined:
If we’re talking about creating the regulation in which people can see whether they can develop services that have benefits using those technologies to the real economy … then I think there’s a real benefit for the U.K.
However, he cautioned: “If we’re talking about using these crypto technologies to create, basically, crypto assets that have nothing behind them … I don’t think there’s ever going to be a sustainable financial activity around that.”
In November, Cunliffe said the collapse of crypto exchange FTX highlighted the urgent need for tighter crypto regulation. The Bank of England executive regularly warned about the danger of cryptocurrency. In July, he said crypto is “prone to collapse.” He also expects to see tough times ahead for the industry as the Federal Reserve continues to tighten financial conditions.