Sir John Cunliffe, the deputy governor of the Bank of England, says that the failure of the FTX exchange has shown how weak crypto assets are.
In an interview with Sky News, Sir Cunliffe said that cryptocurrency has not been regulated for the past ten years.
“I think that’s what [the collapse of FTX] tells you: that a lot of activity has developed in the last 10 years on the trading and selling of crypto assets. Assets with no intrinsic value are incredibly volatile. And all of that has evolved outside of regulation.”
Sir Cunliffe says that the rules would have kept cryptocurrency traders and investors safe from the shady practices that FTX is said to have used.
“What we saw is, I think, at FTX, and there’s an investigation going on there, and I have no knowledge of what’s going on inside that. e have seen that many activities that, in the regulated financial sector, would have some protections and rules around them, happened in an unregulated sector. And then we saw customer money go missing, and conflicts of interest between different operations. Transparency, auditing, and accounting—all probably boring things that happen in the general financial sector—didn’t happen for that set of activities. “And as a result, I think a lot of people have lost a lot of money.”
Sir Cunliffe thinks that there should be rules in place to make sure that people who want to invest in digital assets like bitcoin (BTC) know everything there is to know about the risks.
“Investing in crypto assets like bitcoin and the like is a very speculative activity. Their value may go up, but it can also go down. I think people should invest in that sort of thing. They need to know what they’re getting into, they need to know exactly what they’re buying. It is not a secure investment in which you can keep your money for an extended period of time. It really is, in my view, a gamble. But we allow people to bet. If you want to engage in that, you must be able to do so in a place that is regulated, in the same way, that if you gamble in casinos, they are regulated.”
“You should have full knowledge of what you are doing.”