Bank of England’s Governor Says Cryptocurrencies Need Regulation

Bank of England Deputy Governor Sir Jon Cunliffe is calling for the immediate regulation of cryptocurrencies, according to a Thursday (Oct. 14) report from BBC.

While Cunliffe acknowledged that the digital funds are not a danger to financial security, he said that could change, potentially leading to a crypto crash that could invade the markets, according to the report.

Related news: Bank of England: Measures Needed to Manage Potential Crypto Risks

Cunliffe’s call for crypto regulations is the second time in a matter of days that the Bank of England has made such an assertion. As PYMNTS reported previously, the Financial Policy Committee (FPC) of the Bank of England earlier this week said that both local and international regulations are needed to manage risks associated with cryptocurrencies. Like Cunliffe, the FPC said that cryptocurrencies pose limited direct risks to the U.K. financial system as of now, but that more oversight and law enforcement guidelines are needed in England and globally.

One risk is the possibility that the value of crypto could drop considerably, leaving investors who have assumed debt with brokers in a lurch to find the funds to pay them, according to the BBC report.

See also: Tether Faces Increased Regulatory Scrutiny

In the U.S., cryptocurrency platform Tether is facing similar scrutiny from regulators as they try to understand its cash reserves, organizational structure and more, according to a recent PYMNTS report.

Tether has issued 48 billion Tethers (valued at $1 each) so far in 2021, but it is not clear whether the firm has the necessary financial backing to support that amount, and what would happen if all of the stablecoin owners decided to cash in their investments simultaneously.

In July, Treasury Secretary Janet Yellen met with the chairman of the Federal Reserve, the head of the Securities and Exchange Commission and six other top officials to conduct a probe into Tether before it put the U.S. financial system at risk.

Tether Holdings Ltd. is the company that issues the Tether currency. It collects money from people who wish to trade crypto and then credits their digital wallets. Users can send Tethers to crypto exchanges and use it to buy bitcoin, Dogecoin or any other types of digital currency.