FTX filed for bankruptcy protection earlier this month and said this weekend it owes its 50 largest creditors close to $3.1 billion. Its collapse has led to a number of calls for greater oversight of the crypto industry.
“While the crypto world, as was demonstrated during last year’s crypto winter and last week’s FTX implosion is not at present large enough or interconnected enough with mainstream finance to threaten the stability of the financial system, its links with mainstream finance have been developing rapidly,” Cunliffe said, per a Reuters report.
Speaking during an event at the U.K.’s Warwick Business School, Cunliffe added that the troubles at FTX underlined the need for stricter controls as fast as possible. While the company was not licensed to operate in the U.K., its collapse was nonetheless felt in the country.
“We should not wait until it is large and connected to develop the regulatory frameworks necessary to prevent a crypto shock that could have a much greater destabilizing impact,” Cunliffe said.
His comments came one day after Shelia Bair, the former head of the Federal Deposit Insurance Corporation (FDIC), said regulators need to use existing laws to protect crypto investors rather than wait for the government to create new ones.
“The regulators need to swallow hard and get an agreement and then start implementing, using the authorities they have now,” Bair told the Financial Times. “Set a framework, publicly announce it, implement it through rule changes and policy announcements. But get on with it, because more and more people are getting hurt.”
Calls for crypto regulation have become more pronounced in the two weeks since FTX’s collapse began. The company filed for bankruptcy on Nov. 11, leading to a digital asset market crisis.