Bank of England Deputy Governor Jon Cunliffe said a collapse in the cryptocurrency market was certainly “plausible”, saying regulators around the world must enforce crypto rules “urgently” . While cryptocurrencies are not currently a threat to the country’s financial stability, the deputy governor said there were “very good reasons” to believe that this may not be the case for a very long time.
Crypto Collapse Plausible, crypto rules are “a matter of urgency”
Bank of England Deputy Governor Jon Cunliffe spoke on cryptocurrency and its regulation on Wednesday at the SIBOS conference. He stressed that regulators around the world need to work quickly and establish rules to regulate cryptocurrencies, given the rapid growth of the industry and the time it takes to put new rules in place.
Regulators internationally and in many jurisdictions have started the work. It must be pursued urgently.
As an example of the time it takes to establish new rules, Cunliffe said last week global regulators proposed that the safeguards they apply to systemic clearing houses and payment systems also apply. to stable coins. He added that it took two years to draft this measure, during which the stablecoins were multiplied by 16.
Referring to the collapse of the US mortgage market which led to a global banking crisis, Cunliffe said: “As the financial crisis has shown us, you don’t have to represent a large part of the financial industry to trigger financial stability issues – subprime was valued at around $ 1.2 trillion in 2008. ”He elaborated:
Such a collapse is certainly a plausible scenario, given the lack of intrinsic value and the resulting price volatility, the likelihood of contagion between crypto-assets, cyber and operational vulnerabilities, and of course, the power of herd behavior. .
The Bank of England recently released a report indicating that the risks to the stability of the UK financial system related to cryptocurrencies are currently limited. Cunliffe himself has also previously said that the crypto industry is not large enough to pose a threat to the country’s financial stability. However, he told Wednesday’s conference that there were now “very good reasons” to believe that this might not be the case for a very long time.
Recently, the International Monetary Fund (IMF) released a report indicating that the growing popularity of cryptocurrency could pose risks to financial stability, urging governments around the world to step up efforts and work together to establish rules. communities to regulate cryptocurrencies.
Indeed, bringing the crypto world effectively into the regulatory perimeter will help ensure that the potentially very significant benefits of applying this technology to finance can flourish in a sustainable manner.
What do you think of the words of the Deputy Governor of the Bank of England? Let us know in the comments section below.
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