The collapse of FTX and the fact that its failure was more systemic than technical underscores the importance of properly regulating the cryptocurrency sector, said Bank of England deputy John Cunliffe. said the governor.
Cunliff applied many of his speeches at conferences on DeFi and digital currencies to the FTX implosion and its consequences.
“FTX, along with many other centralized cryptocurrency trading platforms, appears to operate as a conglomerate that brings together products and functions within one company. In traditional finance, these functions are separated into different entities. Or they’re under strict controls and ring-fencing,” Cunliffe told the audience.
The BofE Financial Stability Officer emphasized: “Technology itself does not change the need for transparency in corporate structures, governance, audits, systems and controls, for example to protect client funds.”
Cunliffe said cryptocurrencies need to be regulated to protect investors, protect financial stability and encourage innovation.
A third reason is, “It may seem counter-intuitive to those who think of regulation as opposed to innovation. But as I said before, ‘People fly dangerous planes. There is no.’ Innovation may start in an unregulated space and be adopted at scale within a framework that manages risk against existing standards.”
The Financial Services and Markets Bill currently before Congress could expand the current BofE and FCA regulatory regime on electronic money and payment systems to cover the use of “stablecoins” for payments. I have.
The central bank also plans to launch consultations next year to explore the “corporate structure, governance, accountability and transparency requirements” necessary for stablecoins to meet the standards found in other FS sectors.
Cunliffe also touched on bank efforts on a potential digital pound. This is “driven by trends seen particularly in payments, including the diminishing role of cash, and more generally in the increasing digitization of everyday life.”
He concludes: “.