Traditional markets have regulations to protect investors from
unrecoverable losses, a Bank of England executive recently noted.
Bank of England (BoE) deputy governor for financial stability, Jon
Cunliffe, recommended forming a set of regulations — similar to
conventional financial systems — to tackle risks within the crypto
ecosystem while improving investor confidence.
Speaking
at a press conference, Cunliffe highlighted the recent downfall of the
Terra ecosystem, pointing out that cryptocurrencies that fail to
maintain their value induce stress across crypto markets. He compared
his idea for a crypto regulatory framework to similar instances in
traditional finance wherein regulations shelter investors from
unrecoverable losses, adding:
“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.”
While acknowledging crypto’s
“real potential for use in the financial system,” Cunliffe stated that
regulations for crypto need not be fundamentally different from
traditional finance. However, it may need to be applied differently
while considering the underlying technology powering cryptocurrencies.
BoE
Governor Andrew Bailey stressed the need for involvement of
international bodies in borderless or cross-border trading of
cryptocurrencies. Bailey said that “unbacked crypto” does not have an
intrinsic value but can be better viewed as an investment. On the other
hand, the governor believed that stablecoins are better suited as a
means of payment, adding:
“I think they (cryptocurrencies
and stablecoins) need a different lens, and that's what we're doing in
terms of how we approach it.”
A recent survey of 5,916
citizens conducted by Her Majesty's Revenue and Customs (HMRC) revealed
that an average crypto asset holder in Great Britain considers crypto to
be a "fun investment."
Related: Majority of British crypto owners revealed to be hodlers: Survey
The
report showed that 10% of the respondents hold or have held crypto at
some point in time, with 55% never having sold any. It was also found
that 52% of crypto investors have holdings of up to 1,000 pounds
($1,200).
source link : https://cointelegraph.com/news/crypto-needs-regulation-to-mitigate-risks-says-bank-of-england-exec
