Bank Of England: FTX’s Collapse Demonstrates Need To Regulate Cryptocurrency

On Nov 21st, Jon Cunliffe, Deputy Governor of the Bank of England said on Monday that the collapse of cryptocurrency exchange FTX showed the necessity to include the cryptocurrency system within the regulatory framework. Cunliffe stated FTX’s bankruptcy highlighted the need for regulators to implement stricter controls as soon as possible. Although it didn’t have a license to operate in the UK, FTX has caused troubles in the country. He added that in case of a potentially much greater destabilizing impact caused by cryptocurrency, the UK should formulate necessary regulatory frameworks before the digital currencies have expanded. At present, applicants for cryptocurrency licenses in the UK are only required to show they could exert sufficient controls to prevent money laundering.

The UK is approving a new financial services and markets law which would implement regulation over stablecoin, a crypto asset backed by an asset such as currency, as well as the general marketing of crypto assets. Jane Moore, head of payments and digital assets at the UK’s Financial Conduct Authority, said the cryptocurrency would shape the future of financial services in a certain way and therefore consumer protection had to be taken into consideration. In addition, the British central bank and finance ministry is carrying out research on the potential of a digital pound. Cunliffe said his initial view was FTX’s failure would have no influence on the potential timeline for a digital currency. However, he said after thorough deliberation that the digital world is interconnected and that the UK’s aim was to ensure the innovation should be carried out within a framework where risks were properly managed. The case of FTX provided compelling evidence to strengthen regulation.