The bundling of the services of the crypto exchanges threatens stability, says an official of the Bank of England

crypto exchanges such as the Bankrotte FTX, bundle the services that are kept separate from mainstream institutions should be regulated more strictly before becoming a risk of the financial system, a high-ranking official from the Bank of England.

In a speech on Monday, Sir Jon Cunliffe, deputy governor of the Bank of England, said that the stock exchanges for digital assets create risks for their market by operating business, trading, lending, clearing and maintaining customer assets.

Traditional markets carefully separate these different roles to protect themselves from risks, he said.

Cunliffe's comments follow a number of corporate failure on the cryptom market this year, when prices fell, crowned by the collapse of FTX this month, a crypto currency group worth $ 32 billion in January. Cunliffe said that the experience of the past year had shown that crypto was not yet a stable market.

"Part of this is because its basis is completely unpaid instruments with extreme volatility that can fluctuate wildly," he said at a conference at the Warwick Business School.

"However, one part is also due to the fact that the crypto institutions in the center of a large part of the system exist in a largely unregulated space and are very susceptible to the risks that should avoid regulation in the conventional financial sector."

The sudden collapse of FTX, which until recently was considered one of the most responsible crypto bonds, has increased the pressure on other stock exchanges. Changpeng Zhao, Chief Executive by Binance, has warned that FTX's collapse will strengthen the regulatory control of its surviving competitors.

cunliffes statements indicate that the blurred boundaries between the different roles that play crypto event locations will be a focus for the regulatory authorities, together with the need for "transparency in corporate structures, governance, audit and systems and controls".

The central banker also emphasized the risk of using crypto tokens as security. The strong dependence on FTX and his sister trade company Alameda on the stock market token FTT was a key factor for her collapse.

"A company that accepts its own unreasonable crypto asset as security for loans and margin payments, as there are indications that may have happened with FTX, creates an extreme risk of the wrong way," said Cunliffe.

He confirmed the position of the Boe that cryptoma markets do not yet have the size or narrow connections to traditional markets in order to threaten the broader financial stability, but said that the regulatory authorities had to protect consumers.

"We shouldn't wait until it is big and networked to develop the regulatory framework that is necessary to prevent a crypto shock that could have a much larger destabilizing effect," he said.

The failure of FTX has caused some in the crypto industry to move away from centralized stock exchanges and to decentralized financial protocols in which trade and lending are automatically managed by computer programs.

Cunliffs expressed doubts that these protocols are robust enough to fulfill important market functions and questioned whether they were really decentralized in practice.

"From the perspective of a financial stability authority and a financial supervisory authority, I still have to be convinced that the risks associated with finances can be dealt with effectively in this way," he said.

The United Kingdom enables laws to expand its existing regulatory system for e-money and payment systems in order to cover the use of "stablecoins"-cryptoassets that are covered by a asset like a currency.

The BOE will be responsible for payment systems that are systemic or are likely, and Cunliffe said that it will consult a detailed regulatory framework at the beginning of next year to ensure that the stable coins used in these systems meet the same standards that are expected from commercial money.

he added that the decline of FTX would not change the plans of the Boe and the Ministry of Finance to create a "digital native pound of sterling", whereby a consultation report with the next steps should be published at the end of the year.