The Bank of England (BoE) Deputy Governor for Financial Stability, John Cunliffe, has recommended forming a set of regulations — similar to traditional financial systems — to address risks within the cryptocurrency ecosystem while improving investor confidence.
Speaking at a press conference, Cunliffe highlighted the recent collapse of the Terra ecosystem, noting that cryptocurrencies that fail to maintain their value are causing stress in the crypto markets. He compared his idea of a regulatory framework for cryptocurrency to similar cases in traditional finance where regulations protect investors from irrecoverable losses, adding:
“To me, it underscores the fact that we now need to introduce the regulatory system that will manage those risks in the crypto world the same way we manage them in the traditional world.”
While recognizing the “real potential of using crypto in the financial system,” Cunliffe stated that regulations for cryptocurrencies should not be fundamentally different from traditional finance. However, it may need to be applied differently considering the underlying technology that powers the cryptocurrency.
Bank of England Governor Andrew Bailey stressed the need for international bodies to engage in borderless or cross-border cryptocurrency trading. Bailey said that “unbacked crypto” has no intrinsic value but could be considered a better investment. On the other hand, the governor believes that stablecoins are more suitable as a means of payment, adding:
“I think they (crypto and stablecoins) need a different lens, and that’s what we do in terms of how we approach it.”
A recent survey of 5,916 citizens conducted by Her Majesty’s Revenue and Customs (HMRC) revealed that the average owner of crypto assets in Great Britain considers cryptocurrency to be a “fun investment.”
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The report showed that 10% of respondents have owned or held cryptocurrency at some point, with 55% having never sold any. It also found that 52% of cryptocurrency investors have holdings of up to $1,200 from £1,000.