The Deputy Governor of the Bank of England has warned that cryptocurrencies need to be regulated following the collapse of the FTX exchange.
FTX filed for bankruptcy protection on November 11, and CEO and founder Sam Bankman-Fried resigned.
Sir John Cunliffe told the audience at a Warwick Business School event on Monday: Financial system stability, links with mainstream finance are developing rapidly. ”
“We shouldn’t wait until it gets big and connected to develop the regulatory framework needed to prevent crypto shocks that could have greater destabilizing impact,” said Cunliffe.
The Ministry of Finance will discuss regulations covering the promotion and trading of financial products, including crypto assets.
Cunliffe said the Bank of England is also considering a UK digital currency.
“Our work on a digitally native pound is driven by trends we see particularly in payments, including the shrinking role of cash, and more generally in the increasing digitization of everyday life.”
Mr Cunliffe said:
“Given the trend away from unusable physical cash in an increasingly digital economy and toward potentially new forms of tokenized money, a digital pound may be needed in the future to perform the same function. No,” he warned.
Banking industry body UK Finance recently said cash transactions had fallen from 56% of all payments in 2010 to just 17% in 2020. Juniper Research The value of contactless payment transactions is projected to reach $10 trillion globally by 2027, up from $4.6 trillion this year.
Brett Scott, a former finance industry worker and author of “Cloud Money: Cash, Cards, Cryptocurrencies, and the War for Our Wallets,” said in September that banks and big tech companies are “upgrading their digital systems.” ‘ and said that he constructed a story that is. ” to cash.
“Cash prevents corporate dominance and preserves our autonomy,” Scott said.
“Complete failure of corporate control”
FTX’s new CEO, John Ray III, said on Nov. 17 that there had been a disastrous failure of management oversight.
In filings with the U.S. Bankruptcy Court for the District of Delaware, he said, “In my career, I have seen the utter failure of corporate management and the utter lack of reliable financial information that has occurred here. It never happened,” he said.
“The integrity of the system has been compromised, and control over control in the hands of a very small group of individuals who may be inexperienced, unsophisticated, and potentially at risk from failures in regulatory oversight abroad. Until the concentration, the situation is unprecedented,” he said.
Ray said many companies in the FTX Group, particularly those based in Antigua and the Bahamas, do not have proper corporate governance, and some have never held boards of directors.
“I understand that in the Bahamas, FTX Group’s corporate funds were used to purchase homes and other personal items for employees and advisers,” he said.
“It appears that some of these transactions are not recorded as loans, and we understand that certain properties are recorded in Bahamian records under the personal names of these employees and advisors,” Ray said. added.
An Enron veteran, Ray was named CEO of FTX when it filed for bankruptcy protection after suffering the equivalent of a bank run on cryptocurrencies.
In filing for bankruptcy, FTX has listed over 130 affiliates around the world.
Bankman-Fried’s fortune was estimated at $23 billion (£20 billion), but the collapse of FTX left most of his fortune.
PA Media and AP contributed to this report.
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Chris Summers is a UK-based journalist with a wide range of national coverage, with a particular interest in crime, police and law.