Better regulations are needed to protect the financial system following the collapse of cryptocurrency exchange FTX, a senior Bank of England official has said.
Digital currencies are still too small to pose a threat, but that’s about to change, said Sir Jon Cunliffe.
FTX filed for bankruptcy last week and owes its biggest creditors nearly $3.1bn (£2.6bn).
Thousands of its users are also waiting to get their money back.
Sir Jon, deputy financial stability governor at the bank, also said that recent volatility in the value of cryptocurrencies poses a threat.
The value of Bitcoin, the world’s largest digital currency, has plummeted nearly 70% in the last year.
He said the crypto world is currently not “big enough or not sufficiently connected to mainstream finance to threaten the stability of the financial system.”
But he said his ties to mainstream finance developed quickly.
“We shouldn’t wait until it’s big and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much larger destabilizing effect.”
FTX was not licensed to operate in the UK, but its implosion sent shockwaves around the world.
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