Deputy Governor of the Bank of England, Jon Cunliffe, says a collapse of the cryptocurrency market is certainly “plausible” and states that regulators around the world need to adhere to crypto rules “urgently”. While cryptocurrencies are not currently a threat to the country’s financial stability, there are some “very good reasons” to believe that this may not be the case for long, according to the deputy governor.
Crypto collapse Plausible, crypto rules are “a matter of urgency”
Bank of England Deputy Governor Jon Cunliffe spoke at the SIBOS conference on cryptocurrency and its regulation on Wednesday. He stressed that regulators around the world need to work fast and set rules to regulate cryptocurrencies as the industry is growing rapidly and how long it takes to put new rules in place.
Regulators internationally and in many jurisdictions have started work. It urgently needs to be followed up.
As an example of how long it takes to set new rules, Cunliffe said global regulators suggested last week that the safeguards they are putting in place for systemic clearinghouses and payment systems should also be applied to stablecoins. He added that it took two years to work out this measure, during which the stablecoins rose 16x.
Regarding the US mortgage collapse that led to a global banking crisis, Cunliffe said, “As the financial crisis showed us, you don’t have to consider a large part of the financial sector to trigger financial stability problems – sub-prime went to around 2008 Estimated $ 1.2 trillion. ”He stated:
Such a breakdown is certainly a plausible scenario given the lack of intrinsic value and the resulting price volatility, the likelihood of contagion among crypto assets, the cyber and operational vulnerabilities, and of course the power of herd behavior.
The Bank of England recently released a report stating that the risks to the stability of the UK financial system posed by cryptocurrencies are currently limited. Cunliffe himself also previously said the crypto industry wasn’t big enough to threaten the country’s financial stability. However, he said at the conference on Wednesday that there are now some “very good reasons” to believe that this may not be the case for long.
Recently, the International Monetary Fund (IMF) released a report stating that the rising popularity of cryptocurrencies could pose risks to financial stability, and calls on governments around the world to get involved and work together to establish common rules to regulate cryptocurrencies .
Indeed, the effective integration of the crypto world into the regulatory framework will help ensure that the potentially huge benefits of applying this technology to funding can flourish in the long term.
What do you think of the comments made by the Deputy Governor of the Bank of England? Let us know in the comments section below.
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