FTX collapse shows crypto is ‘too dangerous’ not to regulate, Bank of England deputy governor says
Cryptocurrency trading is “too dangerous” to remain outside mainstream financial regulation and could pose “a systemic problem” without action, the deputy governor of the Bank of England has warned.
Speaking for the first time since the founder of the crypto trading platform FTX was arrested and charged with massive fraud, Sir Jon Cunliffe told Sky News the Bank is considering regulation to protect retail investors in the “casino” of crypto trading, as well as the wider financial system from potential crypto shocks.
Sam Bankman-Fried was extradited on Wednesday from the Bahamas to the US where he will appear in a New York court charged with eight counts of fraud, money laundering and breaking campaign finance.
The collapse of FTX left more than one million customers unable to withdraw assets worth an estimated $8bn.
Prosecutors allege he used FTX’s customers’ money to cover losses in his private crypto hedge fund Alameda Capital in what the company’s new chief executive told Congress was “old-fashioned embezzlement”.
An estimated 80,000 of FTX’s customers are based in the UK, with individual liabilities as high as £5m in life savings according to a lawyer acting for dozens of victims.
Louise Abbott, a crypto-fraud specialist, told Sky News: “These individual investors have invested anything from a couple of thousand pounds up to about £5m, so massive amounts of money, all completely frozen, I’m going to use the word frozen rather than lost, because hopefully there is going to be something given back to them at some point. But this is huge money, huge money lost or stuck, or frozen in time.”
Crypto credibility
The episode is a huge blow to the credibility of cryptocurrencies, digital assets that draw their value not from state backing, but from relative scarcity and the willingness of other investors to trade in them.
Mr Bankman-Fried had cultivated links in Washington and on Wall Street, making millions of dollars in political donations and attracting high-profile investors to his platform.
His fall has emphasised the volatility of crypto investment and the lack of regulation in an industry that, despite widespread scepticism, is attracting growing attention from the financial mainstream.
Efforts to regulate
In the UK, regulators have tried and failed to impose their writ on crypto exchanges domiciled offshore, while the government has a goal, set out in April by Rishi Sunak when he was chancellor, to make the UK a “global crypto assets hub”, an ambition that depends in large part on effective regulation.
Sir Jon, deputy governor with responsibility for financial stability, told Sky News the Bank’s regulation efforts were aimed at protecting individuals and maintaining financial stability.
Deputy Governor of the Bank of England Jon Cunliffe
“There’s a lot of activity that’s developed over the last 10 years on the trading and sale of crypto assets, assets without any intrinsic value, so they’re incredibly volatile. And all of that has grown up outside of regulation,” he said.
“What we saw in FTX… is a number of activities which in the regulated financial sector, would have had certain protections. We saw things like clients’ money appears to have gone missing, conflicts of interest between different operations, transparency, audit and accounting. All of the perhaps boring things that happened in the normal financial sector, didn’t really happen in that set of activities. And as a result, I think a lot of people have lost a lot of money.”
Comparing crypto trading to a casino, Sir Jon said investors who wanted to speculate should be able to do so without the risk of losing access to their funds.
“It is in effect, in my view, a gamble, but we allow people to bet, so if you then want to get involved in that you should have the ability to in a place that is regulated in the same way that if you gamble in a casino it’s regulated. You should have the full information on the tin as to what you’re doing.”
The Bank also has to address the risk to financial stability that could flow from digital assets as institutional investors and banks explore exposure to an estimated $1trn in crypto assets.
“This trading of crypto assets was not big enough to destabilise the financial system, but it was starting to develop links with the financial system,” Sir Jon said. “I don’t know how that will develop. But we had banks and investment funds and others who wanted to invest in it. I think we should think about regulation before it becomes integrated with the financial system and before we could have a potential systemic problem.
“So I don’t think it will be possible to say this can be just kept outside of the financial system. It’s too dangerous. I think it is difficult but possible to say, let’s bring it in, where and when we think we can manage the risk to the standards we’re used to.”
Potential for blockchain
While cryptocurrencies have proved consistently volatile since the inception of Bitcoin 14 years ago, the underlying technology, blockchain, is considered to have significant potential across industries to manage data, and speed up and simplify transactions.
Blockchain provides proof of transactions on a public record known as a distributed digital ledger.
Each new exchange of cryptocurrency is recorded on a “block” which is added to the “chain” containing details of the new transaction and the previous transaction, meaning it can only be falsified by altering all previous links.
The system is maintained and overseen by every computer linked to the network rather than a central monitoring entity.
Mercedes is exploring the potential of blockchain to manage the data that will enable autonomous driving, while Vodafone is exploring its utility in managing the billions of micro-transactions that will be facilitated by the next generation of internet technology.
‘Smart money’ could also simplify global supply chains, with the prospect of micro transactions using stable tokens being linked to individual parts in production processes.
“There are technologies here which could, and I stress could, be of real use in the normal financial system, more efficient ways of doing things, potentially more resilient ways of doing things,” said Sir Jon.
“That hasn’t been proven in the crypto world. But if we could provide a regulatory space where people can see if they can develop products using this, we might be able to get the benefit of some of those technologies.”
The Bank of England’s own digital coin
As part of this process the Bank of England is consulting on plans to develop its own central bank digital coin, an electronic version of sterling that would carry the same security as a pound coin, but with the digital flexibility that could one day replace cash.
“Physical cash will always be made available by the bank as long as people want it and many people depend on it. But it’s not fully usable in the way we live now. So the question for the Bank of England is that as the way we as society changes, as we live our lives more digitally, should we continue to provide money to the public which is usable across a range of transactions?
“This would be a digital equivalent of the’ I promise to pay the bearer’ promise, which in the end underpins confidence in money in the UK. Whenever you want, you can turn that money you hold in the bank into basically Bank of England money backed by the state with that promise to pay the bearer.
“We want to ensure that as physical cash becomes less usable in many parts of the economy, perhaps we need to offer something digitally to provide that underpinning.”
UK
Nurse Sandie Peggie who complained about sharing changing room with transgender doctor wins part of employment tribunal
A nurse who complained about sharing a changing room with a transgender doctor has won part of her employment tribunal against NHS Fife, although several claims were dismissed.
Sandie Peggie took action against the health board and transgender medic Dr Beth Upton after she was suspended from her job at Victoria Hospital in Kirkcaldy following a row with her colleague on Christmas Eve 2023.
Ms Peggie, who has worked for the NHS for 30 years, was placed on special leave after Dr Upton made an allegation of bullying and harassment, and cited concerns about patient care.
The nurse lodged a claim against NHS Fife and Dr Upton, citing the Equality Act 2010, including sexual harassment, harassment related to a protected belief, indirect discrimination, and victimisation.
The employment tribunal hearings took place in Dundee before Judge Sandy Kemp earlier this year.
In a written judgment on Monday, the harassment claim was upheld against NHS Fife, but allegations of discrimination, indirect discrimination and victimisation were dismissed.
The claims against Dr Upton did not succeed and were dismissed.
Dr Beth Upton arriving at the tribunal in February. Pic: PA
Ms Peggie stated: “I am beyond relieved and delighted that the tribunal has found that my employer Fife Health Board harassed me after I complained about having to share a female-only changing room with a male colleague.
“The last two years have been agonising for me and my family.
“I will have much more to say in the coming days once I’ve been able to properly consider the lengthy judgment and discuss it with my legal team.
“For now, I am looking forward to spending a quiet few days with my family.”
Ms Peggie paid tribute to her “incredible” legal team, which included lead counsel Naomi Cunningham, junior counsel Dr Charlotte Elves, and solicitor Margaret Gribbon.
She added: “There are many others I would like to thank and will do so in the coming days.”
Read more:
NHS Fife chief announces early retirement ahead of ruling
The tribunal found that NHS Fife had harassed Ms Peggie by failing to revoke the grant of permission to Dr Upton on an interim basis after the nurse complained, for the period until different work rotas took effect so that they would not work together and said that, as a result, Dr Upton was in the changing room when the claimant was present on two occasions.
It also found the board had harassed Ms Peggie by taking an unreasonable length of time to investigate the allegations against her; by making reference to patient care allegations against her on 28 March 2024; and giving an instruction to her not to discuss the case, until a further message a little over two weeks later which confirmed that applied only to the investigation.
A separate hearing on remedy – which could see Ms Peggie receive financial compensation – will take place at a later date.
NHS Fife said it had been a “complex and lengthy process”.
The health board added: “The employment tribunal unanimously dismissed all of the claimant’s allegations against Dr Upton and all of the allegations against the board apart from four specific aspects of the harassment complaint.
“We will now take time to work through the detail of the judgment alongside our legal team to understand fully what it means for the organisation.
“We want to recognise how difficult this tribunal has been for everyone directly and indirectly involved.
“Our focus now is to ensure that NHS Fife remains a supportive and inclusive environment for all employees and our patients and to deliver health and care to the population of Fife.”
Retired footballer Joey Barton has been sentenced over X posts he sent to football pundits Eni Aluko and Lucy Ward, along with broadcaster Jeremy Vine.
Barton, 43, had been found guilty of six counts of sending a grossly offensive electronic communication with intent to cause distress or anxiety.
He was sentenced to a six-month prison sentence, suspended for 18 months, at Liverpool Crown Court on Monday.
Please use Chrome browser for a more accessible video player
Watch judge’s remarks in Barton sentencing
The former Manchester City, Newcastle United and Rangers midfielder had claimed he was the victim of a “political prosecution” and denied his aim was to “get clicks and promote himself”.
But the jury decided Barton, capped once for England in 2007, had “crossed the line between free speech and a crime” with the six posts he made on the social media platform.
The prosecution argued that Barton, who has 2.5 million followers, “may well be characterised as cutting, caustic, controversial and forthright”.
Peter Wright KC continued: “Everyone is entitled to express views that are all of those things.
“What someone is not entitled to do is to post communications electronically that are – applying those standards – beyond the pale of what is tolerable in society.”
Barton denied 12 counts of sending a grossly offensive electronic communication with intent to cause distress or anxiety between January and March last year.
He was found guilty on six counts, but cleared of another six.
Eni Aluko at London’s Royal Courts of Justice last year for her libel claim against Barton. Photo: PA
In one post in January 2024, Barton compared Aluko and Ward to the “Fred and Rose West of football commentary”, and superimposed the women’s faces on a photograph of the serial murderers.
He also described Aluko as being in the “Joseph Stalin/Pol Pot category”, suggesting that she had “murdered hundreds of thousands, if not millions, of football fans’ ears”.
The jury found him not guilty in relation to the comparison with the Wests, Stalin and Pol Pot, but decided the superimposed image was grossly offensive.
Jeremy Vine. Pic: PA
Another message allegedly suggested Vine had a sexual interest in children, after the broadcaster posted a question relating to the posts about the football commentators asking whether Barton had a “brain injury”.
The court heard Barton replied to Vine’s tweet with a post referring to him as “you big bike nonce” and made references to convicted child sex offender Jeffrey Epstein.
The ex-footballer told the court the posts were “dark and stupid humour” and “crude banter”. He also said he had no intention of implying Vine was a paedophile.
Sentencing, the Honorary Recorder of Liverpool, Judge Andrew Menary KC, told Barton: “Robust debate, satire, mockery and even crude language may fall within permissible free speech.
“But when posts deliberately target individuals with vilifying comparisons to serial killers or false insinuations of paedophilia, designed to humiliate and distress, they forfeit their protection.
“As the jury concluded, your offences exemplify behaviour that is beyond this limit – amounting to a sustained campaign of online abuse that was not mere commentary but targeted, extreme and deliberately harmful.”
Barton was also given a two-year restraining order preventing him from contacting Aluko, Ward or Vine, or publishing any reference to them on a social media platform or broadcast platform.
He will also have to carry out 200 hours of unpaid work in the community and pay prosecution costs of £23,419.
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024