The implosion of cryptocurrency exchange FTX shows the need to bring the crypto world within the regulatory framework, Bank of England (BOE) Deputy Governor Jon Cunliffe said yesterday.
FTX, which has filed for US bankruptcy court protection, said it owes its 50 biggest creditors nearly US$3.1 billion.
“While the crypto world, as was demonstrated during last year’s crypto winter and last week’s FTX implosion is not at present large enough or interconnected enough with mainstream finance to threaten the stability of the financial system, its links with mainstream finance have been developing rapidly,” Cunliffe said.
Photo: Reuters
He added that FTX’s woes highlighted the need for regulators to put in place tighter controls as quickly as possible.
It did not have a license to operate in Britain, yet had caused waves.
“We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilizing impact,” Cunliffe told a Warwick Business School event.
Crypto firms in Britain only have to show they can put in place sufficient controls to stop money laundering, although many firms have had license applications rejected by the UK Financial Conduct Authority.
Britain is approving a new financial services and markets law that would introduce regulation for stablecoins, a cryptoasset backed by an asset such as a currency and marketing of cryptoassets generally.
Cunliffe said that the Bank of England would set out a public consultation to flesh out rules for stablecoins in more detail and on how coinholders’ claims on the issuer and wallets should be structured to deliver redemption at par in line with commercial bank money.
“The FTX example underlines how important these aspects are,” Cunliffe said.
The British Treasury would also consult soon on extending the investor protection, market integrity and other regulatory frameworks that cover the promotion and trading of financial products to activities and entities involving crypto assets, he added.
Jane Moore, head of payments and digital assets at the Financial Conduct Authority, said that crypto would, one way or another, shape the future of financial services and therefore consumer protection must be considered.
Separately, the Monetary Authority of Singapore (MAS) defended its stance on Binance.com (幣安) and FTX, following criticisms about the differing treatment of the two firms since the regulator had previously alerted the public to Binance.com.
The “clear difference” between the two was that Binance.com was “actively soliciting” users in the city-state, to the extent of offering listing in Singapore dollars among other incentives, while FTX was not, the agency said in a statement yesterday.
In response to “questions and misconceptions” that it was possible to protect local users who dealt with FTX, such as by ringfencing their assets or ensuring that FTX backed its assets with reserves, the MAS reiterated that FTX is not licensed in the country and again warned about the dangers of dealing with unregulated entities.
“The most important lesson from the FTX debacle is that dealing in any cryptocurrency, on any platform, is hazardous,” it said. “There is no protection for customers who deal in cryptocurrencies. They can lose all their money.”
Cryptocurrency prices struggled yesterday amid the ongoing crisis sparked by the downfall of Sam Bankman-Fried’s once-powerful FTX empire. The largest token bitcoin fell 0.9 percent to US$16,110.71, while second-ranked ether fell 1.1 percent to US$1,128.49.
Additional reporting by Bloomberg
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US