BoE says future crypto crashes can impact financial system

The deputy governor of the Bank of England has said that following FTX, crypto must have regulations to protect consumers and the wider financial system.

Jon Cunliffe, Deputy Governor of the Bank of England, said that the fall and bankruptcy of FTX shows the necessity for crypto to be brought within the regulatory framework. He spoke at a business school in Warwick :

“While the crypto world, as was demonstrated during last year’s crypto winter and last week’s FTX implosion, is not at present large enough or interconnected enough with mainstream finance to threaten the stability of the financial system, its links with mainstream finance have been developing rapidly,” 

He highlighted the case of FTX as he said that regulators needed to put strict rules in place as soon as possible. He continued:

“We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilising impact,”

In an article in the UK-based Telegraph, Cunliffe was quoted as saying that the huge fall-out from FTX would not prevent the bank continuing with its development of a central bank digital currency (CBDC), acknowledging that there was really no connection between this and crypto.

He added that in particular, incoming regulation would need to ensure that stablecoins “meet standards equivalent to those expected of commercial bank money”.

Opinion

The fall of FTX, as well as the ongoing bankruptcies involving other major players in the centralised cryptocurrency exchange space, has been quite a boon for the banking industry.

It has allowed it to call for ever-tighter regulation under the guise of protecting consumers and the risk of contagion into the traditional financial system.

What is not mentioned is the very real potential for erasing all financial privacies with the roll-out of a central bank digital currency. The narrative in mainstream media appears to be crypto bad and CBDCs good. 

All those interested in the future of finance should investigate both options as a matter of urgency. The time is approaching when CBDCs will be thrust upon the public. Not knowing what they are will be tantamount to giving up one’s freedom without even a whimper.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.