Jon Cunliffe regulation FTX Bank of England Jon Cunliffe

BOE’s Cunliffe says regulation can save crypto from itself, and it’s worth the effort

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Bank of England Deputy Governor Sir Jon Cunliffe shared thoughts on cryptocurrency regulation and decentralized finance (DeFi) in a talk on Nov.

21. He intended to speak about stablecoins and central bank digital currency (CBDC), Cunliffe said at a conference in Coventry, but the collapse of FTX as he wrote his draft speech led him to some more general observations as well.FTX and a number of other centralized crypto asset exchanges “appear to operate as conglomerates, bundling products and functions within one firm” without the tight controls of traditional finance, Cunliffe said.

There is “some tentative and limited evidence” that the failure of FTX has stimulated transfers to decentralized platforms, although he took little comfort from this:Regulation is needed to protect consumers, protect financial stability and encourage innovation, Cunliffe said, and:The Bank of England, Financial Conduct Authority and HM Treasury are setting up a regulatory sandbox to refine “the technologies that have been pioneered and refined in the crypto world, such as tokenisation, encryption, distribution, atomic settlement and smart contracts” that offer benefits for the financial system.The @bankofengland intends to consult in detail the regulatory framework that will apply to such systemic payment systems and the services, like wallets, that accompany them, Jon Cunliffe has shared in a recent speech. #cryptoFull speech transcript quoted himself comparing crypto assets to “unsafe aeroplanes” to demonstrate the role of regulation in innovation.

Crypto “will only be developed and adopted at scale within a framework that manages risks to existing standards,” Cunliffe said.

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