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Highlights
- The Bank of England (BoE) Deputy Governor Jon Cunliffe has warned investors that there are some harsh lessons to be learned from the recent crypto crash.
- Sir Cunliffe likened the crypto crash to the Hindenburg airship disaster, stating such crashes often pull back innovations and their adoption.
- On 13 July, the overall crypto market cap had slumped further, dropping to US$874.25 billion – down by 1.05% at 7:10 AM (GMT +1).
Another crypto crash, another instance when Bitcoin slumped below US$20000. This has become a regular feature of the crypto market now and calls for crypto regulations that can’t get any louder. Bitcoin dropped under US$20000 for the eighth time in July as it closed at US$19,323.91 on 12 July.
On 13 July, the overall crypto market cap had slumped further, dropping to US$874.25 billion – down by 1.05% at 7:10 AM (GMT +1). Bitcoin, on Wednesday, was trading at US$19,495.10 with a volume of US$26,32,66,75,914. The leading crypto was down by 2.31% at the time of writing, raising fears that this crypto winter phase may push it further down. Ethereum, too, was not having a good day as it was down by 3.27%. Ether was trading at US $1,056.36 with a trading volume of US$12,86,96,65,069.
Crypto crash similar to Hindenburg airship disaster
The Bank of England (BoE) Deputy Governor Jon Cunliffe warned investors that there are some harsh lessons to be learnt from the recent crypto crash and the ongoing crypto winter phase. This is a drastic change of fortunes for the global crypto market, considering its market cap had touched US$3 trillion in November 2021.
Sir Cunliffe likened the crypto crash to the Hindenburg airship disaster, stating such crashes often pull back innovations, and a series of crypto winter-like situations will harm the development and adoption of these technologies.
Cunliffe said any financial asset that has no intrinsic value will be volatile and prone to collapse. Taking the example of the recent Terra collapse, Cunliffe said that the adequacy of the backing of other stablecoins is questionable, with Terra breaking its peg. The newly revamped Terra Classic (LUNC) de-pegging from US dollar and Three Arrows Capital filing for bankruptcy would mean that investors may not be able to redeem at par.
Need to accelerate regulation procedures
Cunliffe said the recent turn of events has made it more mandatory for the regulators to accelerate efforts to set regulation procedures in place. He added that crypto activities, going forward, should be carefully regulated and not allowed to function in scenarios where it’s not monitored.
Therefore, it’s essential to find a place for crypto in current frameworks based on the principle of risks and traditional assets' regulatory outcomes.
The UK regulators have been keeping a strict vigil on the functioning of cryptocurrencies and have been warning its citizens of the risks it poses. Regulators are keen to ensure all the proper mechanisms are in place. On 11 July, the Financial Stability Board announced that it intends to present global crypto rules, which would likely apply to G20 member states starting in October.
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