all about cryptop referances
The Bank of England’s Deputy Governor for Financial Stability, Sir Jon Cunliffe, has warned that cryptocurrencies are “very vulnerable to sentiment and prone to collapse.” He urged regulators to “get on with the job” and regulate crypto under the principle of “same risk, same regulatory outcome.”
Sir Jon Cunliffe, Deputy Governor of Financial Stability at the Bank of England (BOE), discussed cryptocurrency risks and regulations this week at the British High Commissioner’s residence in Singapore.
Bank of England chief warns:
Financial assets without intrinsic value … are only worth what the next buyer will pay. They are therefore inherently volatile, very vulnerable to emotions and prone to collapse.
He explained that some cryptocurrencies are purely speculative, without support, and stated that bitcoin, for example, has nothing behind it. He also reiterated his earlier warning that if you invest in cryptocurrencies, you must “be prepared to lose all your money.”
The British central banker added that the recent volatility in the crypto markets has not posed a risk to the overall financial system, noting that crypto may not be “integrated enough” into the rest of the financial system to be an “immediate systemic risk.”
However, Cunliffe argued that the boundaries between crypto and the traditional financial system “will become increasingly blurred,” Cunliffe said that without action, systemic risks would emerge, especially if cryptocurrency activity and its connection to banks and other markets continue to grow. He stressed that regulators must “get on with the job” and bring crypto within the “regulatory circle.”
Cunliffe thought:
The interesting question for regulators is not what will happen next to the value of cryptocurrencies, but what must we do to ensure that… potential innovation… can take place without giving rise to increasing and potentially systemic risks.
The Bank of England’s Deputy Governor for Financial Stability emphasized that crypto-regulation “must be rooted in the iron principle of ‘same risk, same regulatory outcome’.” He continued:
Implicit in our regulatory standards and frameworks are the levels of risk reduction we have deemed necessary.
“Where we can not apply regulation in exactly the same way, we must ensure that we achieve the same level of risk reduction,” he described, suggesting that activities should be stopped “if and when for certain crypto-related activities this proves to be impossible. “
Federal Reserve Deputy Chairman Lael Brainard similarly said last week that the cryptocurrency system is “susceptible to the same risks” as traditional finance. The Fed official added: “Future financial resilience will be greatly improved if we ensure that the regulatory framework encompasses the cryptocurrency system and reflects the principle of the same risk, the same disclosure, the same regulatory outcome.”
Last week, Bank of England Governor Andrew Bailey also told British lawmakers that cryptocurrencies have no intrinsic value, warning that unsupported cryptocurrencies are “very high risk.”
What do you think of the comments of the Bank of England’s Sir Jon Cunliffe? Let us know in the comments section below.
Photo credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or recommendation of products, services or companies. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the Company nor the author is liable, directly or indirectly, for any damage or loss caused or alleged to have been caused by or in connection with the use of or reliance on the content, goods or services mentioned in this article.
