Bank of England Deputy Governor John Cunliffe urged international regulators to develop crypto regulation rules as soon as possible out of fears that the crypto asset market could collapse.
This was stated by John Cunliffe, speaking at the SIBOS conference,
informs Reuters edition. Cunliffe acknowledged that the cryptocurrency industry is booming. This year, the total cryptocurrency capitalization has grown to $ 2.3 trillion.
However, according to Cunliffe, 95% of cryptocurrencies, including Bitcoin, are not backed by assets, and the collapse of the entire cryptocurrency market is a very likely scenario. Therefore, regulators must urgently develop rules to regulate digital assets, Cunliffe said.
“The lack of intrinsic value of cryptocurrencies, their excessive volatility, possible vulnerabilities and herd behavior of people – all this suggests that the likelihood of a collapse of the cryptocurrency market is really high,” said Cunliffe.
The Deputy Governor of the Bank of England believes that the connection between cryptocurrencies and the traditional financial system is growing stronger as large companies, hedge funds and banks become involved in the cryptocurrency industry. Cunliffe also spoke about decentralized finance.
He believes that this unregulated sector poses huge risks to users, as investors are not guaranteed protection when receiving financial services from DeFi projects. Cunliffe said that the Bank of England has already begun to think through a strategy to reduce such risks, and urged other regulators to do the same.
Last week, the Bank for International Settlements (BIS) presented guidance that payments in stablecoins must comply with international standards for payments, clearing and settlement.