Sir Jon Cunliffe, the Deputy Governor of the Bank of England (BoE) disclosed that the Bank of England is planning on stepping up its efforts for introducing crypto regulation.
He stressed that they need to come up with new laws for crypto trading before crypto is fully integrated into the traditional financial system, which would create a possible systemic problem.
Last week on Thursday, the deputy governor for financial stability for the British central bank, Sir Jon Cunliffe shed some light on the matter of crypto regulation.
He elaborated that the Bank of England was planning on introducing new laws aimed at regulation of crypto trading activities after the collapse of the FTX crypto exchange.
He stated that crypto trading has not yet grown to such an extent that it destabilizes the financial system, but it has begun to develop links.
He highlighted that there were investment funds as well as banks that were interested in investing in crypto.
Therefore, he said that it was essential to consider regulation before integration into the financial system which could result in a systemic problem.
He went on to note that rather than imposing a ban on crypto trading, they need to work on regulating the activity.
The deputy governor cautioned that a number of coins in the crypto market were just a ‘gamble’ and did not have any intrinsic value. But, he also said that there were still people out there who wished to engage in crypto trading.
The BOE official said that as long as people were doing so while being aware of the risks and were provided a safe environment, with no illicit finance and money laundering, they should be given a chance.
Cunliffe said that if they were able to develop regulations that would allow people to see whether they can come up with services, which can use crypto to provide benefits to the economy, then it would benefit the UK as a whole.
The BOE official said that if crypto technologies are only used for the development of crypto assets that lack any intrinsic value, then this would not be considered a sustainable financial activity.
These are the risks that have to be mitigated because they do exist in the crypto space, as many tokens do not seem to have any intrinsic value.
The deputy governor had also said back in November that the urgency of developing proper crypto regulation had been highlighted by the spectacular downfall of the FTX crypto exchange.
This is not the first time that the Bank of England executive has brought up the topic of crypto regulation and he had repeatedly warned about risks associated with crypto.
Back in July, he had stated that there was a risk of collapse associated with the crypto space. He also believes that the industry is going to see some difficulties in the future as well.
This is because the Federal Reserve will continue to keep financial conditions tight.