Key Takeaways:
- According to the Bank of England, individuals should be able to securely speculate on cryptocurrencies just like they can on conventional markets.
- The deputy governor of the BoE stated that a central bank digital currency is being developed.
Monetary authorities around the world are increasing their scrutiny of digital assets, in the wake of FTX implosion. The latest to highlight the need for crypto regulation is the deputy governor of Bank of England.
As stated by the deputy governor of the Bank of England Sir Jon Cunliffe, regulation of cryptocurrencies is necessary to safeguard retail investors and the larger financial system as they integrate into traditional finance. According to his statement given to Sky News, to safeguard investors and reduce systemic risk, the central bank is considering taking action to regulate the crypto “casino.”
Sir Jon Cunliffe agreed with the BoE’s approach on retail investors, saying that people should be allowed to securely speculate on cryptocurrencies just like they can on conventional markets. He said:
“I think for the majority of people if they do want to be involved in speculation in crypto for consumer protection and market integrity, they should have a place to do that where they get the protection they would get in a similar activity in the UK,”
According to Sir Jon Cunliffe, cryptocurrency should be regulated as quickly as possible since it is getting increasingly interwoven into the established banking system. He added
“We had banks and investment funds and others who wanted to invest in it, I think we should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem.”
The latest development comes amid the Bank of England seeking input on ideas for its own digital coin. BoE states that the digital coin would carry the same security as a pound coin but be more flexible in the digital realm and perhaps could potentially replace cash in the future.
Commenting on the digital currency, Sir Jon Cunliffe said, “This would be a digital equivalent of the’ I promise to pay the bearer’ promise, which in the end underpins confidence in money in the UK. Whenever you want, you can turn that money you hold in the bank into basically Bank of England money backed by the state with that promise to pay the bearer”. Submissions for a proof of concept for a prototype wallet for a central bank digital currency are being accepted by the Bank of England through December 23.
