Tighter regulations are needed on cryptocurrency, says a senior Bank of England official.
Sir John Cunliffe from the UK’s central bank believes more protections are needed to be put in place to protect the financial system following the crash of FTX last week - who filed for bankruptcy and now owes more than $3.1 billion - before anything else happens.
The deputy governor for financial stability believes the explosive nature of them posed a threat as Bitcoin - the world’s largest cryptocurrency - lost more than 70 per cent of its value in the last year.
John wants action before it becomes "large enough or interconnected enough with mainstream finance to threaten the stability of the financial system".
He told a crowd at a Warwick Business School, according to BBC News: "We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilising impact.
"The experience in other areas of digitalisation has demonstrated the difficulty of retrofitting regulation on new technologies and new business models after they have reached systemic scale.”
John’s comments come as the Parliament is expected to pass the Financial Services and Markets Bill, which will bring a beginning of regulations.
In a joint statement, the members of the G20 - which include the UK Prime Minister Rishi Sunak and US President Joe Biden - came together to urge for "public awareness" about cryptocurrency with the eventual goal of regulating it.
They said:"It is critical to build public awareness of risks, to strengthen regulatory outcomes and to support a level playing field, while harnessing the benefits of innovation.
