Crypto News

Cryptocurrency Regulation Enlightenment, Courtesy BOE Deputy Governor

[ad_1]

The “same risk, same regulation” premise should guide the development of cryptocurrency rules, according to Jon Cunliffe, the deputy governor of the Bank of England.

On 12 July 2022, Jon Cunliffe gave a speech in which he discussed some of the most important takeaways from the crypto winter. He underlined the need for a quick regulatory framework for cryptocurrencies.

1200x 1
Jon Cunliffe, the deputy governor of the Bank of England

Cunliffe discussed the most current developments in the cryptocurrency world. The crypto bear market has proven to be challenging for many due to falling cryptocurrency values and unstable cryptocurrency companies. Despite the fact that cryptocurrencies contribute in the development of finance, he continued, appropriate regulation should be put in place to reduce the risks involved. He said,

“Crypto–technologies offer the prospect of substantive innovation and improvement in finance. But to be successful and sustainable innovation has to happen within a framework in which risks are managed: people don’t fly for long in unsafe aeroplanes”

Does cryptocurrency have no intrinsic value?

Cunliffe emphasised a number of cryptocurrencies and their lack of inherent worth using the example of the preceding months. He continued by stating that these cryptocurrencies are extremely volatile and subject to sudden changes in value.

He talked about bitcoin and claimed that, despite the coin’s promises to be an inflation hedge, it is a speculative and dangerous asset. Cunliffe also discussed how the collapse of the algorithmic stablecoin Terra pressured the market as a whole.

Cunliffe also emphasised the risks associated with utilising leverage in cryptocurrency trading. He claimed that losses might increase significantly, particularly when the projections differed from those of the investors.

He also emphasised the necessity of swiftly establishing a regulatory framework. According to Cunliffe, digital assets are still not in a position to constitute a systemic risk. Cunliffe further stated,

“Or to put it the other way around, the lesson we should not take from this episode is that ‘crypto’ is somehow ‘over’ and we do not need to be concerned about it anymore.”

Cunliffe also emphasised that the existing banking system will eventually incorporate the underlying technologies of digital assets. The “same risk, same regulatory consequence” idea should be applied to rules, he added. In order to reduce the same dangers associated with cryptocurrency, the regulators should disseminate the already in place financial rules.

[ad_2]

Source link