Following China’s seemingly decisive “latest” ban on crypto related activities and the unleashing of IMF’s Global Financial Stability report, debate about a concerted regulation of crypto assets heats up as Deputy Governor of Bank of England calls for “urgent regulation”.
Sir Jon Cunliffe, the Deputy Governor for Financial Stability of the Bank of England has called for the regulation of crypto currencies, describing it as “a matter of urgency” and warning of a “plausible” market crash.
Likening the destabilizing power of crypto currencies to the domino effect that triggered the economic crash of 2008, Cunliffe’s statements pointed at the disproportionate threat the rather limited market of crypto currencies can pose and a meltdown that can cause “huge and persistent economic damage” to the international financial system.
In view of the rapid expansion of the crypto industry and its integration into the traditional system, Cunliffe emphasized the growth of crypto trading platforms in the past two years – the amount of time taken by supervisory bodies to draft regulatory guidance.
Crypto assets worldwide have grown to $2.3trn in 2021. A rapid deflation in the value of assets which are not backed by any fiat currency can send seismic waves and disrupt the global financial system.
The IMF had voiced warnings in the Global Financial Stability Report published October 12, about the risks of wider crypto adoption by the developing world, and the crypto currencies’ vulnerability of being instrumentalised for tax evasion purposes.
Bank of England image by Robert Bye
