Bank of England deputy governor Jon Cunliffe has said that the recent collapse of FTX, the world’s second-largest cryptocurrency exchange, has highlighted the need for regulation of the market.

"While the crypto world, as was demonstrated during last year’s crypto winter and last week’s FTX implosion is not at present large enough or interconnected enough with mainstream finance to threaten the stability of the financial system, its links with mainstream finance have been developing rapidly," said Cunliffe at a Warwick Business School event on Monday.

He warned that stakeholders and regulators should not wait until the market is large and connected to develop a regulatory framework necessary to stop a “crypto shock that could have a much greater destabilising impact”.

"The experience in other areas of digitalisation has demonstrated the difficulty of retrofitting regulation on new technologies and new business models after they have reached systemic scale," he continued.

Less than a week after agreeing a deal to be acquired, FTX filed for bankruptcy.

Founder and chief executive Sam Bankman-Fried, once dubbed the ‘King of Crypto’ also resigned from the company as it continues to be investigated by authorities in the Bahamas and in the US.

The firm filed for Chapter 11 bankruptcy , with FTX’s filing estimating that it had between $10 billion and $50 billion in assets and liabilities and more than 100,000 creditors.

The nature of the filing means that FTX can continue to operate while restructuring its debts, however the world’s leading payments processor Visa has severed its global credit card agreements with FTX.

https://www.fstech.co.uk/fst/FCA_Warns_Against_Cryptocurrency_Exchange_FTX.php

In September the Financial Conduct Authority (FCA) warned consumers to avoid the crypto exchange.

At the time, the financial watchdog said that FTX was providing financial products and services in the UK without the necessary authorisation.

On its website, the FCA stated: “This firm is not authorised by us and is targeting people in the UK. You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”

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