Bank of England (BoE) deputy governor for financial stability, Jon Cunliffe, recommended forming a set of regulations — similar to conventional financial systems — to tackle risks within the cryptocurrenc ecosystem while improving investor confidence.
Speaking at a press conference, Cunliffe highlighted the recent downfall of the Terra ecosystem, pointing out that cryptocurrencies that fail to maintain their value induce stress across crypto markets. He compared his idea for a crypto regulatory framework to similar instances in traditional finance wherein regulations shelter investors from unrecoverable losses, adding:
“For me, it underlines the fact that we need now to bring in the regulatory system that will manage those risks in the crypto world in the same way that we manage them in the conventional world.”
While acknowledging crypto’s “real potential for use in the financial system,” Cunliffe stated that regulations for crypto need not be fundamentally different from traditional finance. However, it may need to be applied differently while considering the underlying technology powering cryptocurrencies.
BoE Governor Andrew Bailey stressed the need for the involvement of international bodies in borderless or cross-border trading of cryptocurrencies. Bailey said that “unbacked crypto” does not have an intrinsic value but can be better viewed as an investment. On the other hand, the governor believed that stablecoins are better suited as a means of payment, adding:
“I think they (cryptocurrencies and stablecoins) need a different lens, and that’s what we’re doing 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 an average crypto asset holder in Great Britain considers crypto to be a “fun investment.”
The report showed that 10% of the respondents hold or have held crypto at some point in time, with 55% never having sold any. It was also found that 52% of crypto investors have holdings of up to $1,200, of 1,000 Great British pounds.