Bank of England wants to regulate cryptocurrencies like traditional finances

Deputy governor for financial stability at the Bank of England Jon Cunliffe stated that the cryptocurrency industry should be regulated similarly to traditional finance. He believes this will reduce risks in the cryptocurrency ecosystem while increasing investors’ confidence.

At a press conference, Jon Cunliffe suggested forming a set of rules for the crypto industry similar to those in the traditional financial system to “reduce risk in the cryptocurrency sector and increase investor confidence.” He referred to the recent collapse of the Terra blockchain ecosystem, saying that cryptocurrencies that fail to maintain their value and stability cause stress in the markets. In his opinion, investors must know that their capital is protected from irrecoverable losses.

“For me, it underlines the fact that we need now to bring in the regulatory system that will manage those risks in the crypto world in the same way that we manage them in the conventional world,” he said. 

Also, he noted that the potential of digital currencies in the financial system is enormous. With proper regulation, it can be fully incorporated into traditional finance. That’s why, as he said, the rules should be developed similarly. Nevertheless, he did not deny that regulations must be adjusted for cryptocurrencies because their underlying technology differs from traditional financial systems. 

Bank of England governor Andrew Bailey also supported Cunliffe’s idea and added that international authorities should be involved in cross-border cryptocurrency trading. He also said that unsecured crypto-assets have no intrinsic value and are better viewed as investments. 

China also sees the necessity to regulate the market. Earlier Chinese tech giants such as Tencent, Ant Group, and Baidu decided to regulate the NFTs sphere and will fight speculation on non-fungible token marketplaces.