Crypto needs regulation to mitigate risk, says Bank of England chief

Traditional markets have regulations to protect investors from unrecoverable losses, a Bank of England executive noted recently. New

The Bank of England's (BoE) Deputy Governor for Financial Stability, Jon Cunliffe, has recommended putting in place a set of regulations - similar to conventional financial systems - to tackle risks within the cryptocurrency 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 are causing stress in crypto markets. He compared his idea for a crypto regulatory framework to similar cases in traditional finance where regulations protect investors from unrecoverable losses, adding:

"To me, this underscores the fact that we now need to put in place the regulatory system that will manage these risks in the crypto world the same way we manage them in the conventional world."

While acknowledging the “true potential for using crypto in the financial system,” Cunliffe said crypto regulation need not be fundamentally different from traditional finance. However, it may need to be applied differently while considering the underlying technology that powers cryptocurrencies.

BoE Governor Andrew Bailey has stressed the need to involve international bodies in borderless or cross-border cryptocurrency trading. Bailey said “unbacked crypto” has no intrinsic value but can best be viewed as an investment. On the other hand, the governor felt that stablecoins were more suitable as a means of payment, adding:

"I think they (cryptocurrencies and stablecoins) need a different focus, and that's what we're doing in terms of approach."

A recent survey of 5,916 citizens by Her Majesty's Revenue and Customs (HMRC) found that an average holder of crypto assets in Britain views crypto as a "fun investment".< /p>

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