Skip to main content

BoE warns for crypto.

 Crypto exchanges such as the bankrupt FTX that bundle together services kept separate by mainstream institutions should be more tightly regulated before they become a risk to the financial system, a senior Bank of England official has warned.

Digital asset exchanges created risks to their markets by operating businesses that encompassed trading, lending, clearing and custody of client assets, Sir Jon Cunliffe, deputy governor, said yesterday. However, he noted that traditional markets maintain careful separation between these different roles to guard against risks.

«But part is also because the crypto institutions at the centre of much of the system exist in largely unregulated space and are very prone to the risks that regulation in the conventional financial sector is designed to avoid».

The sudden failure of FTX, considered until recently one of the most responsible crypto venues, has heaped pressure on other exchanges. For example, Changpeng Zhao, Binance's chief executive, has warned FTX's collapse will increase regulatory scrutiny of its surviving peers.

«A firm accepting its unbacked crypto asset as collateral for loans and margin payments, as there are indications may have happened with FTX, creates extreme 'wrong way' risk,» said Cunliffe.

He restated the BoE's position that crypto markets do not yet have the scale or close links to traditional markets to threaten more comprehensive financial stability but said regulators needed to protect consumers.

Labels:

Comments

  1. Anonymous22 November 2022 at 12:31

    Can't understand how FTX was considered one of the more responsible crypto venues. I hear all sorts of crazy stories about how things were handled there and it makes me wonder. Are we this easily duped? Why wasn't anyone checking on these guys?

    ReplyDelete

Post a Comment

Cloud Bookkeeping

HS2 cost cuts new routes and add delays.

 Trans­port depart­ment offi­cials have begun work on «Project Sil­ver­light» sug­gest­ing the high­speed rail scheme might face four addi­tional years of delay. The planned High Speed 2 rail line faces fur­ther delays of up to four years and more cuts to the project under plans being drawn up by min­is­ters to rein in its bal­loon­ing costs. The extra delays to the coun­try’s biggest infra­struc­ture project would mean that it would not be com­pleted until as late as 2045 — 12 years after ori­gin­ally planned. «This is a func­tion of infla­tion; we are hav­ing to find huge sav­ings because the cost of everything the depart­ment is already doing will have become so much more expens­ive by then,» said one gov­ern­ment offi­cial. In Octo­ber, the FT repor­ted that the Treas­ury had asked HS2’s man­age­ment team to identify poten­tial cuts or «scope reduc­tions» to the high-speed line. Trans­port depart­ment offi­cials have sub­sequently begun work on Project Sil­ver­light aimed at fi...
4 comments
Read more

Tax cut

  Sterling tumbled against the dollar to below $1 . 09 ,  hitting its lowest point since 1985 ,  after UK chancellor Kwasi Kwarteng unveiled a £45bn debt-financed tax-cutting package that sparked a historic increase in borrowing costs .  Kwarteng’s political and economic gamble includes the biggest set of tax cuts for 50 years ,  with the end of the 45p additional rate for the highest earners as well as a sharp reduction in levies on dividends .  But concern over the amount of debt required to finance the tax cuts triggered a frenetic day of trading that raised doubts on whether Britain’s new economic approach was sustainable .  «Britain will be remembered for having pursued the worst macroeconomic policies of any major country in a long time» . Kwarteng has staked the political fortunes of the Conservative party on the bet that the radical tax cuts and deregulation will raise Britain’s sluggish growth rate to 2 . 5 per cent .  «This is a new appr...
Post a Comment
Read more

EU business slide.

  S&P Global’s flash eurozone composite purchasing managers’ index, a key gauge of business conditions for the manufacturing and services sector, fell 1 point to 47.1, figures showed yesterday. That is its lowest level since November 2020 and the fourth consecutive month below the crucial 50 mark separating growth from contraction. One of the few bright spots in the survey was that companies in all sectors reported a slight easing of cost pressures, price growth and supply chain constraints. However, prices charged for goods and services still rose at the sixth fastest rate since such data started in 2002. Jobs growth increased marginally from October but remained low compared with the past 18 months. Following a few months of falling price pressure in manufacturing and services, the October print shows an overall stabilisation said Jens Eisenschmidt, chief European economist at Morgan Stanley. However, German businesses, at the hub of Europe’s energy crisis, reported that manu...
1 comment
Read more