Tech

FTX crisis explains need to bring crypto world into regulatory framework: Bank of England


Bank of England Deputy Governor Jon Cunliffe said that the explosion of the FTX cryptocurrency exchange shows the need to bring the crypto world into the regulatory framework.

FTXfiled for US bankruptcy court protection, saying it owes its 50 largest creditors nearly $3.1 billion (about Rs 25,350 crore).

“Although the crypto world, as demonstrated during last year’s crypto winter and last week’s FTX explosion, is currently not large enough or linked enough to mainstream finance to threaten stability. of the financial system, but its links to mainstream finance have been growing rapidly,” said Cunliffe.

He added that the woes of FTX underscored the need for regulators to put in place tighter controls as quickly as possible.

“We should not wait until it is large and connected to develop the necessary regulatory frameworks to prevent a crypto shock from having an impact,” Cunliffe said during a Warwick Business School event. much more destabilizing.”

Currently, crypto companies in the UK only have to prove they can put in place adequate controls to prevent money laundering, although many have been banned by UK regulators. refuse the license application.

Britain is approving a new financial services and markets law that will regulate stablecoins, a cryptocurrency backed by an asset like currency, and the marketing of cryptocurrencies in general.

Cunliffe said the BoE will launch a public consultation to come up with more detailed stablecoin rules on how coin holder requirements for issuers and wallets should be structured. structure to make an equivalent conversion to the commercial bank’s money.

“The FTX example underscores the importance of these aspects,” said Cunliffe.

The Treasury Department will also soon consult on expanding investor protections, market integrity and other regulatory frameworks including the promotion and trading of financial products. for crypto-asset-related activities and entities, he added.

Separately, the BoE and the finance ministry are looking at the potential of the digital pound.

“Our aim is to ensure that innovation can take place but within a framework where risks are properly managed,” says Cunliffe. “The events of last week provide a compelling demonstration of why that matters.”

© Thomson Reuters 2022


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