BoE executive stresses crypto regulation to protect investors

  • Crypto needs regulation to protect investors and mitigate risks, BoE deputy governor for financial stability says. 
  • The bank exec emphasized the Terra downfall, stating that cryptos that do not maintain their value will affect the whole market. 

The deputy governor for financial stability at the Bank of England (BoE), Jon Cunliffe, has called for the regulation of crypto to protect investors. Cunliffe recommended guidelines that will regulate the issuance of crypto and reduce risks associated with digital assets.

At a financial stability report press conference, the BoE executive referred to the recent collapse of the Terra ecosystem. He noted that cryptocurrencies that do not maintain their value would impact the entire crypto market. The BoE deputy governor related his call for crypto regulation with similar instances in traditional finance. He added that rules in traditional finance protect investors from unrecoverable losses. 

We’ve seen all those lessons play put in the conventional financial system, that’s why we have regulation to deal with it, and I think for me it underlines the fact that we need now to bring in the regulatory system that will manage those risks in the crypto world in the same way that we manage them in the conventional world.

He added that the technology for regulating traditional finance is not entirely different from crypto but the application. However, its application is different. 

BoE exec says crypto needs regulation to lessen the risk

Meanwhile, BoE Governor Andrew Bailey emphasized the need for international bodies to participate in border or cross-border crypto trading. In Bailey’s opinion, “unbacked crypto” lacks intrinsic value but can be considered a better investment. Also, the BoE governor said stablecoins have better use as payment. 

I think they [crypto and stablecoins]need a different lens, and that’s what we’re doing in terms of how we approach it.

Notably, many crypto owners in Britain are rather hodling. Her Majesty’s Revenue and Customs (HMRC) revealed in a recent survey of 5,916 citizens that British crypto owners consider it a “fun investment.” In summary, the research shows that an average of crypto assets owners in Britain is young, male, and a hodler. 10 percent of the study participants hold or have held crypto, while 55 percent never sold their holdings. At the time of the research, only 7 percent had over £5,000 in value. On the other hand, 52 percent of the current owners have holdings of up to £1,000. 

Many prominent names in the UK are clamoring for crypto regulation. The Bank of England’s Financial Policy Committee said digital assets pose risks to the nation’s financial system. The Committee noted in its quarterly Financial Stability Report that there is a need for “enhanced regulatory and law enforcement frameworks to address developments in these markets.”

Meanwhile, ECB officials stressed on harmonization of crypto regulation. The ECB expressed its worries over regulatory overlap and wants to create a new law that harmonizes crypto regulation. China is also planning to up crypto regulation after the collapse of the Terra ecosystem.  

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Bio: Ibukun Ogundare is a crypto writer and researcher who uses non-complex words to educate her audience. Ibukun is excited about writing and always looks forward to bringing more information to the world.

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