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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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Storm Bert: Father rescues son from sinking car as floods wreak havoc

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Storm Bert: Father rescues son from sinking car as floods wreak havoc

Tragedy almost struck a family in West Yorkshire after a father had to suddenly rescue his 11-month-old son from their flooded car.

Andre Randles, 22, was driving with baby Luca from Hebden Bridge to his father’s home in Todmorden to watch a football match on Saturday afternoon.

He was diverted away from his main route when he hit a dip and went “straight into a puddle of water”.

Speaking to Sky’s Shingi Mararike, Mr Randles said he thought it was a shallow puddle that he could drive through but soon his car began to float.

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Paige and Andre
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Andre Randles’ partner Paige Newsome said the incident was ‘really scary’

He called emergency services but soon “water started seeping in”.

“I thought I’m going to have to get out, I’m going to have to smash a window,” Mr Randles said.

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He wound down his and his son’s windows, and climbed out before rescuing his son.

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‘Devastating’ flooding in Wales

“The water was chest high, I held him up as high as I could to keep him out of the water.”

“It wasn’t raining so heavily, I’ve driven in much worse rain,” he added.

Mr Randles, a self-employed roofer who relies on the car for work, said he remained calm during the ordeal and was helped by the fact that Luca was asleep during the rescue.

Mr Randles’ partner Paige Newsome – who was not in the car at the time – said the incident was “really scary”.

“To think I could have actually lost them both – I don’t know how I would’ve lived,” she said.

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Resident feels ‘abandoned’ in floods

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The road has been flooding for at least two decades, the couple said.

“What is it going to take for the council to sort it out? Does a fatal incident have to happen? It’s been going on for years,” Ms Newsome said.

The couple are worried about affording another car as well as Christmas celebrations.

But Mr Randles said: “I’m grateful that we got out safely and that we can spend his first birthday and Christmas as a family.”

Storm Bert has brought more than 80% of November’s average monthly rainfall in less than 48 hours to some parts, the Met Office said.

Around 300 flood warnings and alerts are in place in England, with another 100 in Wales and nine in Scotland, as heavy rain and thawing snow bring more disruption across the UK.

A major incident was declared by Rhondda Cynon Taf County Borough Council in South Wales after homes and cars were submerged in water.

‘It is devastating’

Gareth Davies, who owns a garage in Pontypridd, a town in Rhondda Cynon Taf, told Sky’s Dan Whitehead that flooding has put his small business “back to square one”.

As the River Taff burst its banks, the majority of the vehicles in Mr Davis’s garage were so damaged he says they will have to be written off.

Garage in wales destroyed by Storm Bert
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Mr Davies speaking to Sky’s Dan Whitehead in his flooded garage

Garage in wales destroyed by Storm Bert

“I am gutted,” he said, standing in his flooded garage, most of which is also covered in oil after a drum tipped over.

“How long is it going to take to sort out? I am going to lose money either way. I can’t work on people’s cars when I am trying to sort all of this out.

“It is devastating.”

Mr Davies said he has never had an issue with water coming into his garage until now.

Garage in wales destroyed by Storm Bert

Pointing to one car that had been hoisted into the air before water reached it, he said: “Lucky enough, I did come in this morning just to get that car up in the air.

“I don’t know what to say, I have been working flat out for two years to build this up and something like this happens, and it just squashes it all.

“This has put me back to square one.”

At least two to three hundred properties in South Wales have been affected by flooding, Councillor Andrew Morgan, leader of Rhondda Cynon Taf Borough Council, said on Sunday.

He said the affected buildings are a mixture of residential and commercial properties, after the weather turned out to be worse than what was forecast.

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MP behind assisted dying bill says she has ‘no doubts’ – as she rejects minister’s ‘slippery slope’ claim

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MP behind assisted dying bill says she has 'no doubts' - as she rejects minister's 'slippery slope' claim

The Labour MP behind the assisted dying bill said she has “no doubts” about its safeguards after a minister warned it would lead to a “slippery slope” of “death on demand”.

Kim Leadbeater told Sky’s Sunday Morning With Trevor Phillips that she has “huge respect” for Justice Secretary Shabana Mahmood, but that she doesn’t agree with her opinion.

In a strongly worded intervention ahead of Friday’s House of Commons vote, Ms Mahmood said the state should “never offer death as a service”.

She said she was “profoundly concerned” by the legislation, not just for religious reasons, which she has previously expressed, but because it could create a “slippery slope towards death on demand”.

Asked about the criticism, Ms Leadbeater said: “I have got a huge amount of respect for Shabana. She’s a very good colleague and a good friend.

“In terms of the concept of a slippery slope, the title of the bill is very, very clear.

“It is called the Terminally Ill Adults (End of Life) Bill. It cannot include anybody other than people who are terminally ill, with a number of months of their life left to live. It very clearly states that the bill will not cover anybody else other than people in that category.”

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Ms Leadbeater’s bill proposes legalising assisted dying for people with six months left to live, on the approval of two doctors and a High Court judge.

She wants people who are in immense pain to be given a choice to end their lives, and has included a provision in the legislation to make coercion a criminal offence.

The matter will be debated for the first time in almost 10 years on Friday, with MPs given a free vote, meaning they can side with their conscience and not party lines.

As a result, the government is meant to remain neutral, so the intervention of cabinet ministers has provoked some criticism from within party ranks.

Labour peer Charlie Falconer told Sky News Ms Mahmood’s remarks were “completely wrong” and suggested she was seeking to impose her religious beliefs on other people.

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Kevin Hollinrake says he will be in favour of the assisted dying bill

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Mum diagnosed with cancer tells of the day her life changed ahead of assisted dying vote

Why is assisted dying so controversial and where is it legal?

Asked about his comments, Ms Leadbeater said it was important to remain “respectful and compassionate throughout the debate” and “for the main part, that has been the case”.

She added: “The point about religion does come into this debate, we have to be honest about that. There are people who would never support a change in the law because of their religious beliefs.”

Ms Leadbeater went on to say she had “no doubts whatsoever” about the bill, which has also been objected by the likes of Health Secretary Wes Streeting and former Labour prime minister Gordon Brown.

Asked if she has ever worried about people who don’t want to die taking their own lives because of the legislation, Ms Leadbeater said: “No, I don’t have any doubts whatsoever. I wouldn’t have put the bill forward if I did.

“The safeguards in this bill will be the most robust in the world, and the layers and layers of safeguarding within the bill will make coercion a criminal offence.”

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Mum diagnosed with cancer tells of the day her life changed ahead of assisted dying vote

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Mum diagnosed with cancer tells of the day her life changed ahead of assisted dying vote

There is a lot at stake this week for Sophie Blake, a 52-year-old mother to a young adult, who was diagnosed with stage four cancer in May 2023.

As MPs vote on whether to change the law to allow assisted dying, Sophie tells Sky News of the day her life changed.

“One night I woke up and as I turned I felt a sensation of something in my breast actually move, and it was deep,” she says, speaking from her home in Brighton.

“Something fluidy, a very odd sensation. I woke up and made a doctor’s appointment.”

Sophie underwent an ultrasound followed by a biopsy before she was taken to a room in the clinic and offered water.

“They said, ‘a hundred percent, we believe you have breast cancer’.”

But it was the phone call with her mother that made it feel real.

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“My mum had been waiting at home. She phoned me and said ‘How is it darling?’ and I said ‘I’ve got breast cancer,’ and it was just that moment of having to say it out loud for the first time and that’s when that part of my life suddenly changed.”

Sophie says terminal cancers can leave patients dreading the thought of suffering at the end of their lives.

“What I don’t want to be is in pain,” she says. “If I am facing an earlier death than I wanted then I want to be able to take control at the end.”

Assisted dying, she believes, gives her control: “It’s an insurance policy to have that there.”

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Why is assisted dying so controversial and where is it legal?
UK on ‘slippery slope’ Justice Minister says ahead of vote

On Friday, the government is set to debate the issue before voting on it. Sophie hopes they’ll back the proposal.

“It should be my choice to be able to have a compassionate death,” she says.

There has been much debate about the bill since details about how it would work were published earlier this month.

On Friday, former prime minister Gordon Brown became the latest senior political figure to share his opinion on the matter, coming out as against the legalisation of assisted dying, based on his experience of his own daughter’s death.

Disability rights advocate Lucy Webster warns that for people like Sophie to have that choice, others could face pressure to die.

Lucy Webster, disability rights advocate
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Lucy Webster

“All around the world, if you look at places where the bill has been introduced, they’ve been broadened and broadened and broadened,” she tells Sky News.

Lucy is referring to countries like Canada and Netherlands, where eligibility for assisted deaths have widened since laws allowing it were first passed.

Lucy, who is a wheelchair user and requires a lot of care, says society still sees disabled people as burdens which places them at particular risk.

“I don’t know a single disabled person who has not at some point had a stranger come up to us and say, ‘if I were you, I’d kill myself’,” she says.

The assisted dying bill, she says, reinforces the view that disabled lives aren’t worth living.

“I’ve definitely had doctors and healthcare professionals assume that my quality of life is inherently worse than other people’s. That’s a horrible assumption to be faced with when [for example] you’ve just gone to get antibiotics for a chest infection. There are some really deep-seated medical views on disability that are wrong.”

Under the plans, a person would need to be terminally ill and in the final six months of their life, and would have to take the fatal drugs themselves.

Among the safeguards are that two independent doctors must confirm a patient is eligible for assisted dying and that a High Court judge must give their approval. But the bill does not make clear if that is a rubber-stamping exercise or if judges will have to investigate cases including risks of coercion.

Julian Hughes, honorary professor at Bristol Medical School, says there’s a very big question about whether courts have the room to take on such a task.

Julian Hughes, honorary professor at Bristol Medical School
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Julian Hughes

“At the moment in the family division I understand there are 19 judges and they supply 19,000 hours of court hearing in a year, but you’d have to have an extra 34,000,” he explains.

“We shouldn’t fool ourselves and think that there wouldn’t be some families who would be interested in getting the inheritance rather than spending the inheritance on care for their elderly family members. We could quickly become a society in which suicide becomes normalised.”

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