Bank of England Considers Crypto Regulation Key for UK to Realize Benefits

The deputy governor of the UK central bank, Sir John Cunliffe, revealed heightened plans for crypto trading regulation. The Bank of England (BoE) executive considers regulating virtual assets trading critical since integrating cryptos and conventional financial systems could trigger contagious systematic problems.
BoE’s Crypto Advocacy
In a December 22 interview with Sky News, Cunliffe admitted that the sudden FTX exchange collapse prompted urgency in BoE to step up efforts to formulate crypto-relevant laws. The BoE’s deputy chief indicated that while the scale of turmoil in crypto assets trading did not destabilize the economy, the links developing could bring down the global financial systems.
Cunliffe elaborated that conventional financial institutions, such as investment funds and conventional banks, have expressed increased interest in investing in crypto assets. The keen interest demonstrated by the financial institutions necessitates comprehensive regulation to guide crypto integration with the financial systems.
Heightened Rush for Crypto Regulation
Sir Cunliffe decried authorities proposing restrictive policies. Instead, he considered it prudent to enact regulations that support crypto trading. He cautioned the existence of many coins mirroring gambling and lacking intrinsic value.
Nonetheless, there exist genuine crypto operators and assets whose efforts are susceptible to money laundering, scam, and illicit financing. The BoE official elaborated that such awareness is fuelling the push for a regulatory framework that safeguards the platform to tap existing virtual assets opportunities.
BoE Warns of Crypto Volatility and Vulnerability to Fraud
Sir Cunliffe argued that formulating regulations that can nurture crypto assets’ benefits is critical to enable the UK to realize inherent opportunities in blockchain technologies. He warned that the existing crypto technologies should deliver virtual assets with intrinsic value. Its achievement is necessary to accomplish sustainable financial activity derived from cryptos.
After the FTX exchange downfall in November, the aftershocks witnessed triggered the urgency to embrace tighter virtual assets regulation. Cunliffe referred to earlier warnings issued by BoE in July about the cryptos’ volatility and susceptibility to fraud. Stemming the challenges and avoiding their spillover to the financial system mandates a heightened effort by BoE amidst tighter financial conditions.
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