The deputy governor for financial stability of the Bank of England, Jon Cunliffe, recommended the creation of a set of regulations -similar to those of conventional financial systems- to face the risks of the cryptocurrency ecosystem and improve investor confidence. .
In a press conference, Cunliffe highlighted the collapse of the Terra ecosystem, noting that cryptocurrencies that fail to hold their value induce tension in all digital asset markets. He compared his idea of a regulatory framework for cryptocurrencies to similar cases in traditional finance, where a set of regulations protect investors from deadweight loss, adding:
“To me, it brings out the fact that we need to now bring in the regulatory system that manages those risks in the crypto world in the same way that we manage them in the mainstream world.”
Although it recognizes the “real potential of cryptocurrencies for use in the financial system”, Cunliffe stated that the regulation of cryptocurrencies does not have to be fundamentally different from that of traditional finance. However, it may need to be applied differently considering the underlying technology behind these assets.
The Governor of the Bank of England, Andrew Bailey, he underscored the need for international bodies to engage in borderless or cross-border trading of cryptocurrencies. Bailey said that “unbacked cryptocurrencies” have no intrinsic value, but can best be considered as an investment. On the other hand, the executive considered that stablecoins are more suitable as a means of payment, adding:
“I think (crypto and stablecoins) need a different approach, and that’s what we’re doing in terms of how we approach it.”
A recent survey of 5,916 citizens by Her Majesty’s Revenue and Customs (HMRC) revealed that the average crypto asset investor in Britain considers them a “fun investment”.
The report showed that 10% of respondents own or have owned crypto at some point, and 55% have never sold anything. It was also found that 52% of crypto investors have holdings of up to $1,200, or GBP 1,000.
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