Ever since the alleged collapse of FTX exchanges, the crypto sector has struggled to recover. The prices of cryptocurrencies have been through major fluctuations in the past few days, which is seen as problematic.
Sources reveal that the fear of the volatility of cryptocurrencies has intensified among authorities preventing some from even considering the use cases of cryptocurrencies. One such authority is the Bank of England (BoE).
The Bank of England is the central bank of the United Kingdom and is currently planning to double its efforts to improve crypto regulation in the country. The organization has cited the collapse of FTX as one of the primary reasons behind the resurfacing of the discussions of crypto regulation in the country. Furthermore, the bank’s authorities have highlighted that the exchange’s downfall has signified the dangers that the crypto sector possesses.
Aligning with the organization’s stance, Jon Cunliffe, the bank’s deputy governor, has raised his stance in an interview. He has warned that the regulation must come before a more extensive problem has to be dealt with. In his words:
“We should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem.”
Cunliffe has been one of the most prominent critics of cryptocurrencies. Citing the market turmoil following the bankruptcies of firms this year, the central bank official has been demanding a regulatory framework as he believes it would be needed to support a stable crypto system.
Amidst a total of $2 trillion reduction in the total market capitalization of crypto assets, Todayq News reported in July that the BOE wants stricter law imposition and regulation for the crypto industry.
The crypto market has been struggling to get back to the $1 trillion level following the bankruptcies of significant crypto firms. The market lost close to 25% within three days in November, and ever since the drop, the market has tried to recover multiple times but has failed. One such failed attempt was on December 14, when about $75 billion was wiped off the market.
Thus, as per the supporters, regulations in the crypto market could curb such situations. However, currently stuck at around $774 billion, the crypto market would require more than just regulations to pass the $800 billion level.