Deputy Governor of the Bank of England Jon Cunliffe stated that cryptocurrencies and related services should be more strictly regulated. Cunliffe, who was supposed to speak about stablecoin regulation, instead brought up the recent collapse of the cryptocurrency exchange FTX.

Regulation Motives

Cunliffe outlined several reasons for bringing the financial service activities and the entities that now colonize the crypto world only within the regulatory framework in the wake of the latest FTX collapse.

First, Cunliffe emphasized the instant need to protect investors, claiming that they deserved to operate in fair markets. He then emphasized the importance of preserving overall financial stability.

Because of FTX's integration and size within the crypto ecosystem, its demise had a significant impact. Many related exchanges and projects have had to close or are currently facing severe financial difficulties.

However, the deputy governor noted that this had been different with popularized finance. Although Cunliffe strongly advised the establishment of a regulatory framework for cryptocurrencies to avoid this potential outcome.

British Overseas Territories

Nonetheless, given the focal point of the debacle, the central bank's calls for regulatory necessity ring somewhat ironically. FTX was headquartered in the Bahamas, a former British colony and member of the Commonwealth of Nations.

In fact, several prominent offshore financial centers with lax regulations continue to be British Overseas Territories. Bermuda, the Cayman Islands, and the Isle of Man are among them.

When discussing FTX recently, former Securities and Exchange Commission Chairman Jay Clayton investigated these locations. "Offshore financial institutions simply do not have any of the fundamental safeguards that we have in the United States," he said on CNBC's Squawk Box.

Clayton also advocated for a more comprehensive regulatory approach to mitigate the harm caused by similar incidents. "There is room for improvement in regulatory cooperation. You would have had less of this if we had more global cooperation,"  Clayton said.

What do you think of the Bank of England's recent call for crypto regulation? Let us know your thoughts by sharing this article on social media.

Nov 21, 2022
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