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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.”

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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 speaks during the Bank of England's financial stability report at the Bank of England in central London on June 27, 2017. / AFP PHOTO / POOL / Jonathan Brady        (Photo credit should read JONATHAN BRADY/AFP via Getty Images)
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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.”

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UK weather: Water shortfall declared ‘nationally significant’ – as amber heat health alert set to strike

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UK weather: Water shortfall declared 'nationally significant' - as amber heat health alert set to strike

The water shortfall situation in England has been described as a “nationally significant incident”, with five areas officially in drought ahead of an amber heat health alert coming into force for large parts of the country.

Six further areas are experiencing prolonged dry weather following the driest six months to July since 1976.

Many river flows and water reservoir levels in England continue to recede compared to June despite some storms and showers in July, which helped mask that it was still the fifth-warmest July on record.

A drone view from June shows vehicles using a bridge to pass over a dry section of the Woodhead Reservoir. Pic: Reuters
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A drone view from June shows vehicles using a bridge to pass over a dry section of the Woodhead Reservoir. Pic: Reuters

A general view of Lindley reservoir near Otley in West Yorkshire with low water levels in June. Pic: PA
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A general view of Lindley reservoir near Otley in West Yorkshire with low water levels in June. Pic: PA

Drier conditions have returned in August and now parts of the country are bracing for the fourth heatwave 2025, with today’s amber alert covering the East Midlands, West Midlands, East of England, London, and the South East.

Temperatures are forecast to rise above 30C (86F) in some areas, possibly even soaring past 35C (95F) in the south, threatening this year’s heat record of 35.8C (95.4F) in Faversham, Kent, on 1 July.

A milder yellow heat health alert is in place for the South West, North East, North West, Yorkshire and The Humber.

The alerts by the UK Health Security Agency (UKHSA) are due to be in place from 9am today until 6pm tomorrow, and put more pressure on struggling public water supplies and navigational waterways.

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People enjoy the weather in Barnes on Monday. Pic: PA
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People enjoy the weather in Barnes on Monday. Pic: PA

A man stands on a paddleboard with his dog near the beach at Rhos-on-Sea, Wales. Pic: Reuters
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A man stands on a paddleboard with his dog near the beach at Rhos-on-Sea, Wales. Pic: Reuters

‘We are calling on everyone to play their part’

The National Drought Group (NDG), which includes the Met Office, government, regulators, water companies, the National Farmers’ Union, Canal & River Trust, anglers, and conservation experts, met at the start of the week to highlight the water-saving measures each sector is taking.

The group praised the public for reducing their daily usage, after Yorkshire Water reported a 10% reduction in domestic demand following the introduction of their hosepipe ban, which saved up to 80 million litres per day.

“The situation is nationally significant, and we are calling on everyone to play their part and help reduce the pressure on our water environment,” said Helen Wakeham, NDG chair and director of water at the Environment Agency.

“Water companies must continue to quickly fix leaks and lead the way in saving water.

“We know the challenges farmers are facing and will continue to work with them, other land users, and businesses to ensure everyone acts sustainably.”

Current drought situation in England

– Drought has been declared in: Yorkshire, Cumbria and Lancashire, Greater Manchester Merseyside and Cheshire, East Midlands, West Midlands.

– Areas in prolonged dry weather (the phase before drought) are: Northeast, Lincolnshire and Northamptonshire, East Anglia, Thames, Wessex, Solent and South Downs.

– Yorkshire Water has a hosepipe ban in place for all its customers, while Thames, South East, and Southern Water have postcode-specific bans.

– Reservoirs fell by 2% last week and are now 67.7% full on average across England. The average for the first week of August is 80.5%.

– The lowest reservoirs are Blithfield (49.1%), Derwent Valley (47.2%), Chew Valley Lake (48.3%), Blagdon (46.3%).

– Rainfall in July was 89% of the long-term average for the month across England. This is the sixth consecutive month of below-average rainfall.

– Across the country, 51% of river flows were normal, with the rest below normal, notably low or exceptionally low.

– Two rivers – Wye and Ely Ouse – were the lowest on record for July.

– There are currently navigation closures or restrictions across sections of the Leeds and Liverpool, Macclesfield, Trent and Mersey, Peak Forest, Rochdale, Oxford and Grand Union Canal.

The rainfall at the end of July was welcomed by growers, even though the dry weather is set to have an impact on the harvest, with the National Farmers Union (NFU) noting how water shortages have impacted the growing season.

“Some farms are reporting a significant drop in yields, which is financially devastating for the farm business and could have impacts for the UK’s overall harvest,” NFU vice-president Rachel Hallos said.

Ms Hallos urged that investment in water infrastructure and a more effective planning system was urgently needed “to avoid the swing between extreme drought and flooding and to secure water supplies for food production”.

Read more:
What is a heat-health alert?
How heatwaves affect your health

Where are hosepipe bans in place?

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Drought in England explained

The dry weather also impacts the health of the waterways, as low water levels reduce oxygen levels in the water, which can lead to fish deaths, more algae growth, and could prevent wildlife from moving up or downstream.

Water minister Emma Hardy said the government is “urgently stepping up its response” to respond to dry weather, including investment in new reservoirs, but called on firms to do their bit.

“Water companies must now take action to follow their drought plans,” she said.

“I will hold them to account if they delay.”

Tips for staying cool from the UKHSA

  • Close windows and curtains in rooms that face the sun
  • Seek shade and cover up outside
  • Use sunscreen, wear a hat and sunglasses
  • Keep out of the sun at the hottest times, between 11am and 3pm
  • Restrict physical activity to the cooler mornings or evenings
  • Know how to respond to heat exhaustion and heatstroke

“We face a growing water shortage in the next decade,” the minister warned, which she said is why building new reservoirs – something the government has criticised the previous administration for not doing – is so important.

The hot and dry conditions have also led to warnings of wildfires, following blazes near Wimborne in Dorset and at Edinburgh’s Arthur’s Seat over the weekend.

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House of Lords under fire for dropping rule that once caught out cricket legend and historian

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House of Lords under fire for dropping rule that once caught out cricket legend and historian

Campaigners have criticised a change to the rules around declarations of interest in the House of Lords as a “retrograde step” which will lead to a “significant loss of transparency”. 

Since 2000, peers have had to register a list of “non-financial interests” – which includes declaring unpaid but often important roles like being a director, trustee, or chair of a company, think tank or charity.

But that requirement was dropped in April despite staff concerns.

Tom Brake, director of Unlock Democracy, and a former Liberal Democrat MP, wants to see the decision reversed.

“It’s a retrograde step,” he said. “I think we’ve got a significant loss of transparency and accountability and that is bad news for the public.

“More than 25 years ago, the Committee on Standards in Public Life identified that there was a need for peers to register non-financial interests because that could influence their decisions. I’m confused as to what’s happened in the last 25 years that now means this requirement can be scrapped.

“This process seems to be all about making matters simpler for peers, rather than what the code of conduct is supposed to do, which is to boost the public’s confidence.”

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MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic
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MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic

Rules were too ‘burdensome’, say peers

The change was part of an overhaul of the code of conduct which aimed to “shorten and clarify” the rules for peers.

The House of Lords Conduct Committee argued that updating non-financial interests was “disproportionately burdensome” with “minor and inadvertent errors” causing “large numbers of complaints”.

As a result, the register of Lords interests shrunk in size from 432 pages to 275.

MPs have a different code of conduct, which requires them to declare any formal unpaid positions or other non-financial interests which may be an influence.

A source told Sky News there is real concern among some Lords’ staff about the implications of the change.

Non-financial interest declarations have previously highlighted cases where a peer’s involvement in a think tank or lobbying group overlapped with a paid role.

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Protesters disrupt House of Lords

Cricket legend among peers to breach code

There are also examples where a peer’s non-financial interest declaration has prompted an investigation – revealing a financial interest which should have been declared instead.

In 2023, Lord Skidelsky was found to have breached the code after registering his role as chair of a charity’s trustees as a non-financial interest.

Lord Skidelsky. Pic: UK Parliament
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Lord Skidelsky. Pic: UK Parliament

The Commissioner for Standards investigated after questions were raised about the charity, the Centre for Global Studies.

He concluded that the charity – which was funded by two Russian businessmen – only existed to support Lord Skidelsky’s work, and had paid his staff’s salaries for over 12 years.

In 2021, Lord Botham – the England cricket legend – was found to have breached the code after registering a non-financial interest as an unpaid company director.

The company’s accounts subsequently revealed he and his wife had benefitted from a director’s loan of nearly £200,000. It was considered a minor breach and he apologised.

Former cricketer Lord Botham. File pic: PA
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Former cricketer Lord Botham. File pic: PA

‘Follow the money’

Lord Eric Pickles, the former chair of the anti-corruption watchdog, the Advisory Committee on Business Appointments, believes focusing on financial interests makes the register more transparent.

“My view is always to follow the money. Everything else on a register is camouflage,” he said.

“Restricting the register to financial reward will give peers little wriggle room. I know this is counterintuitive, but the less there is on the register, the more scrutiny there will be on the crucial things.”

Lord Eric Pickles
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Lord Eric Pickles

‘I was shocked’

The SNP want the House of Lords to be scrapped, and has no peers of its own. Deputy Westminster leader Pete Wishart MP is deeply concerned by the changes.

“I was actually quite horrified and quite shocked,” he said.

“This is an institution that’s got no democratic accountability, it’s a job for life. If anything, members of the House of Lords should be regulated and judged by a higher standard than us in the House of Commons – and what’s happened is exactly the opposite.”

Public confidence in the Lords is already at a low ebb after the PPE controversy surrounding Baroness Michelle Mone, who took a leave of absence in 2022.

Michelle Mone attends the state opening of parliament in 2019. Pic: Reuters
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Michelle Mone attends the state opening of parliament in 2019. Pic: Reuters

The government has pledged to reform the House of Lords and is currently trying to push through a bill abolishing the 92 remaining hereditary peers, which will return to the House of Commons in September.

But just before recess the bill was amended in the Lords so that they can remain as members until retirement or death. It’s a change which is unlikely to be supported by MPs.

Read more from Sky News:
Warning over water shortfall

Trump gaffe speaks volumes

MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic
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MPs and peers alike have long faced scrutiny over their interests outside Westminster. File pic

A spokesperson for the House of Lords said: “Maintaining public confidence in the House of Lords is a key objective of the code of conduct. To ensure that, the code includes rigorous rules requiring the registration and declaration of all relevant financial interests held by members of the House of Lords.

“Public confidence relies, above all, on transparency over the financial interests that may influence members’ conduct. This change helps ensure the rules regarding registration of interests are understandable, enforceable and focused on the key areas of public concern.

“Members may still declare non-financial interests in debate, where they consider them directly relevant, to inform the House and wider public.

“The Conduct Committee is appointed to review the code of conduct, and it will continue to keep all issues under review. During its review of the code of conduct, the committee considered written evidence from both Unlock Democracy and Transparency International UK, among others.”

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Man who plotted to murder gang member involved in record-breaking heist attacked in prison

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Man who plotted to murder gang member involved in record-breaking heist attacked in prison

A man jailed for plotting to murder a member of the gang that carried out Britain’s biggest-ever cash robbery has been attacked in prison.

Daniel Kelly, 46, was one of three men found guilty of conspiring to murder Paul Allen, 46, who was shot twice as he stood in his kitchen in Woodford, east London, on 11 July 2019.

The attack left the former cage fighter – who was a member of the Securitas heist gang that stole £54m from a cash depot in Tonbridge, Kent, in 2006 – paralysed from the chest down.

Paul Allen was jailed for 18 years over the Securitas heist. Pic: PA
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Paul Allen was jailed for 18 years over the Securitas heist. Pic: PA

Paul Allen was in the kitchen when he was shot. Pic: Met Police
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Paul Allen was in the kitchen when he was shot. Pic: Met Police

Kelly was sentenced to 36 years in prison, with an extra five years on licence, at the Old Bailey in April.

Louis Ahearne, 36, was jailed for 33 years, and his brother Stewart Ahearne, 46, was jailed for 30 years over the shooting, likened by detectives to “the plot [of] a Hollywood blockbuster”.

A source told Sky News that Kelly was attacked by another prisoner who tried to slit his throat on his arrival to Frankland prison, in County Durham, last week.

“Danny is a gunman happy to shoot people but not scary with his hands. He’s a dead man walking in jail,” they said.

HMP Frankland in Durham
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HMP Frankland in Durham

Read more from Sky News:
Trump gaffe speaks volumes
UK facing ‘significant’ water shortfall

It is understood Kelly suffered only minor injuries and the Prison Service is treating the attack as a minor incident.

Allen was living in a large detached rented house with his partner and three young children after being released from an 18-year prison sentence over the Securitas raid when he was shot.

In her sentencing remarks, Judge Sarah Whitehouse KC said she believed the three men convicted “were motivated by a promise of financial gain”, but she had “no doubt” others were involved.

The day before the shooting, Kelly and Louis Ahearne used a rented car to carry out a burglary in Kent, accessing the gated community by pretending to be police officers.

A month before that, Kelly and the Ahearnes stole more than $3.5m (£2.78m) worth of Ming dynasty antiques from the Museum of Far Eastern Arts in Geneva, for which the brothers had been jailed in Switzerland.

Kelly is also wanted in Japan over the robbery of a Tokyo jewellery store in 2015 in which a security guard was punched in the face – but extradition proceedings have been put on hold while he serves his sentence.

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