Bank of England leader calls crypto regulation a 'matter of urgency' for financial stability


Tightening ties between traditional finance and cryptocurrency markets mean that regulators around the world can't stop talking crypto.

On October 13, Jon Cunliffe, deputy governor of financial stability at the Bank of England, spoke on the risks crypto poses to the financial system, particularly in  stablecoins, decentralized finance and derivatives trading on unbacked digital assets. 

While Cunliffe repeatedly noted that cryptocurrency markets remain quite small, he highlighted that the risks they pose hinge upon "the degree of interconnectedness between crypto and the conventional financial sector." That degree of interconnectedness has been growing.

Cunliffe found regulation's pace to be lacking, especially relative to the rate of the industry's developments. Speeding up regulation, he said, "needs to be pursued as a matter of urgency."

He explained:

"Financial stability risks currently are relatively limited but they could grow very rapidly if, as I expect, this area continues to develop and expand at pace. How large those risks could grow will depend in no small part on the nature and on the speed of the response by regulatory and supervisory authorities."

The Bank of England has been engaged with crypto regulation for some time, especially in its capacity as a monetary authority and ongoing work on a digital pound. Alongside HM Treasury's Katharine Braddick, Cunliffe leads a recently established joint task force of the two UK regulators, focusing on digital currency. 

Trending Stories

Get Your Crypto
Daily Brief

Delivered daily, straight to your inbox.

The Era of dFMI for Institutional Digital Asset Markets

Post-trade in capital markets today operates primarily based on provision of balance-sheet to off-set counterparty risk, either directly or indirectly, via settlement agents, CCPs and CSDs etc.  The issues with this ‘hub and spoke’ model are well known, including the resulting massive duplication of data, bifurcated processes, concentration of risk and subsequent deployment of capital and resources that could be better utilized. 
Read Full Story
Sponsored Post

Retail traders are here to stay, says eToro's US CEO

On this episode of The Scoop, eToro's newly appointed US lead Lule Demmissie explained why she doesn't see retail's newfound presence in the market subsiding anytime soon and how eToro plans to capitalize on growing the business across cryptocurrencies and stock trading.
Read Full Story
Jan 26, 2022, 4:23PM UTC