Ever since the cryptocurrency industry faced the FTX crash, it has not been able to recover to the pre-FTX crash levels.
The headwinds are constantly increasing when it comes to the cryptocurrency industry’s movement. The entire downfall is clearly visible from the declining market valuation of the cryptocurrency industry.
Volatility Fear has intensified
For those who had stopped believing that the crypto industry was no longer volatile, the FTX crash was the perfect demonstration that it never ended.
The cryptocurrency industry has continued collapsing at really high levels and at times, it does make a comeback. However, the comebacks are not strong at all and the industry ends up facing another major downfall.
Global Regulators are Active against Crypto
In recent years and especially, in the running year, the crypto industry has proven it is extremely unpredictable. It has the tendency of causing losses in billions of dollars to the people interacting with them.
Therefore, the regulators have grown highly concerned about the industry and its constant decline. This is the reason why the regulators are trying to warn their investors about this industry.
Given the nature and history of the cryptocurrency industry, regulators are trying their best to warn their investors about its risks.
Although there are many uncertainties among the investors, they are still investing in the crypto industry.
Therefore, the regulators want this to stop at once but they cannot enforce their decision over the locals. This is the reason why the regulators are issuing warnings against the dealing and possession of crypto.
Bank of England is concerned
For years, the Bank of England and other regulatory authorities in the United Kingdom have continued warning their investors against crypto.
Many times, their fears and doubts have come true in the form of the locals facing huge losses due to frauds/scams. Still, people are not learning and they are eager to invest in cryptocurrencies.
Their spending in cryptocurrencies normalizes after some time and the crypto fraudsters and scams get the chance to rerun their swindles.
This time, the Bank of England is concerned about the entire situation and the FTX crash seems to have triggered that.
The BoE is now eager to bring in more regulations and strictness towards the crypto sector. The regulator has demanded that more regulations and strictness must be introduced within the crypto sector.
This needs to be done if the investors are to be provided with protection and safety against fraudulent projects.
The FTX crash was a global event as it ended up affecting investors worldwide. Therefore, the BoE is also concerned about its local investors who ended up becoming the exchange’s victims.
Now the regulator wants things to be dealt with in the most professional and precise manner.
Statement by Jon Cunliffe
The Deputy Governor of the Bank of England recently made a statement surrounding the matter where he talked about the cryptocurrency industry.
He talked about the uncertainties and the risks the cryptocurrency industry poses to the traditional financial system.
He stated that given the current crypto market situation, it is best that the technology is not allowed to integrate with the traditional financial system.
If it is allowed to integrate and operate within the traditional financial system, it will prove to be catastrophic.
Before the crypto industry is allowed to operate and integrate, it is important strict regulations are introduced. Until that happens, the crypto sector must not be allowed to expand above a certain level.
Cunliffe stated that systemic issues may arise if they do not do anything to regulate the industry. He demanded a firm and a well-defined crypto regulatory framework.
Until that is introduced, the crypto sector must not be allowed to expand within the jurisdiction.
Cunliffe pointed out the crypto market valuation that was over $2.5 trillion at the beginning of 2022. In a matter of months, the valuation dropped from that level to $1 trillion and now, it is $774 billion.
He stated that if the downfall continues, the overall crypto market valuation would plunge to $300 billion.