The Bank of England reiterated its desire to regulate cryptocurrencies. Bank of England Vice-President John Cunliffe said in his speech at the British High Commission in Singapore that lessons should be learned from the “crypto winter”, highlighting Bitcoin’s drop from its all-time high of $69,000 last November.
Today, Bitcoin is trading at $19,797, which is 71% cheaper than its peak last year. Nearly every cryptocurrency on the market has been down this year as investors shun risky assets, including cryptocurrencies and stocks, amid signs of a deepening recession. According to Cunliff, it's time for regulators to step up and protect investors from further losses.
“Cryptocurrencies and related technologies offer significant innovation and development prospects in finance. But to be successful and sustainable, innovation must occur within a risk-managed framework. Because people don't fly in unsafe planes for long.”
Continuing his explanations, Cunliffe said that most cryptocurrencies have no real value and are therefore “prone to crash”. Stating that he also thinks that the crypto money world will be permanent, Cunliffe added that regulators should act quickly to bring the use of crypto money technologies in the field of finance into the regulatory framework. He also warned that many of the stablecoins became unstable after the collapse of the UST, the Terra network token.
As it is known, stablecoins are considered as the backbone of the cryptocurrency ecosystem. These cryptocurrencies are pegged to assets such as euros or US dollars to maintain a fixed value. But in May, the stablecoin Terra, a popular blockchain where many investors have invested billions of dollars, completely collapsed. In other words, gaps emerged between the dollar and the fixed dollar.
As a result of such market-shattering developments, the Bank of England, earlier this month, called for tougher laws to protect the broader financial system in the future.
In fact, the Bank of England is not the only central bank to demand regulation in the cryptocurrency space. The central banks of many countries are making statements to take the necessary steps to regulate cryptocurrencies. Finally, last week, the vice chair of the Federal Reserve echoed similar calls, referring to the significant losses among cryptocurrency investors.