BoE deputy governor: Crypto should be a matter of urgency for regulators

A central bank official spoke out about the potential risks that cryptocurrencies or stablecoins could pose when they are connected to traditional financial systems via individuals, financial institutions and banks.
Price volatility, even among major cryptocurrencies, “could trigger margin calls on crypto positions forcing leveraged investors to find cash to meet them, leading to the sale of other assets and generating spillovers to other markets.” Cunliffe said that although price volatility is common among major cryptos, it could trigger margin calls on crypto positions, causing leveraged investors to seek cash to meet them. This could lead to the sale or transfer of assets to other markets. “How large those risks could grow will depend in no small part on the nature and on the speed of the response by regulatory and supervisory authorities.”Related: Bank of England governor issues crypto investment warningCunliffe has previously argued that England’s central bank should “issue public digital money that can meet the needs of modern day life,” implying that a digital pound may be in the BoE’s future. He is currently co-chairing the U.K. government’s task force to study the possibility of a central bank digital money.

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