Bank of England calls for urgent regulation of cryptocurrencies
John Cunliffe, Deputy Governor for Financial Stability at the Bank of England, spoke about the risks that cryptocurrency poses to the financial system. He specifically mentioned stabelcoins, decentralized financing, and derivatives trading on unsecured digital assets.
Although Cunliffe repeatedly reiterated that cryptocurrency markets remain fairly small, he stressed that the risks they pose depend on the "degree of interconnection between cryptocurrency and the conventional financial sector." And it is gradually growing.
Bank of England calls for urgent regulation of cryptocurrencies
In this regard, the official found that the lack of regulation is critical, especially given the pace at which the industry is evolving. The adoption of regulations, he said, "needs to be done as a matter of urgency."
The risks to financial stability are relatively limited at the moment, but they could grow very quickly if, as I expect, this area continues to develop and expand at this rate.
How great these risks are will depend in no small part on the nature and speed of the regulatory and supervisory response.
The Bank of England has already begun to regulate cryptocurrencies, continuing its work on the digital pound. Along with Catherine Braddick of the U.K. Treasury Department, Cunliffe is leading a newly created joint working group of the two U.K. regulators that is focusing on digital currency.
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