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The FTX breakdown has created a high level of doubt and fear among crypto investors and users. Investors are afraid to make a move on cryptocurrency after facing huge losses in the backdrop of recent events. Recently, Jon Cunliffe, the Bank of England (BOE) deputy governor, said cryptocurrency trading is “too dangerous.”
In an interview with Fox News, Jon Cunliffe recently highlighted the former FTX CEO Sam Bankman-Fried arrest in the Bahamas. He said that to avoid crypto crashes and to protect investors, crypto assets must be regulated like traditional finance. If no action is taken on digital assets, it won’t be long before another FTX happens in the crypto market.
After FTX collapsed, nearly one million users could not withdraw their assets from the platform. Fox News mentioned more than 80,000 FTX customers are in the United Kingdom to protect the investors in the “casino” of crypto trading. Cunliffe said strict regulations on digital assets are needed.
He said, “It is in effect, in my view, a gamble, but we allow people to bet, so if you then want to get involved in that you should have the ability to in a place that is regulated in the same way that if you gamble in a casino it’s regulated.”
There is no specific law for cryptocurrency in the UK. The country considers crypto assets property but not legal tender. And crypto exchanges must register with the UK Financial Conduct Authority (FCA).
In October, the Bank of England discussed new plans to introduce a central bank digital currency (CBDC) working towards the long-term goal of transitioning to a cashless nation. The central bank said it has to observe closely whether to introduce CBDC or not. Debate is on about its impact on the nation it is introduced and how it would work.
Cunliffe added, “We want to ensure that as physical cash becomes less usable in many parts of the economy, perhaps we need to offer something digitally to provide that underpinning.”
Recently, a survey was conducted on the top UK banks to know whether they are interested in introducing cryptocurrency transactions on their users’ accounts. As crypto markets are unregulated in the UK, 47% of the banks refused to support digital assets. The Financial Conduct Authority (FCA) recently said, “if you invest in crypto assets, you should be prepared to lose all your money.”
Recently, London-based Starling Bank announced that it would impose restrictions on crypto transactions. Starling, a digital bank, stated there is a high risk for digital assets in today’s crypto explaining its decision to ban the activities which are related to crypto on users’ cards. The users of Starling Bank will no longer buy or sell digital assets from crypto exchanges.
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