In a recent interview, Sir Jon Cunliffe, Deputy Governor for Deposits at the Bank of England (BoE), shared his thoughts on crypto and how to manage it.
According to his BoE biography, Sir Jon Cunliffe “was appointed Deputy Governor for Financial Stability on November 1, 2013”. He is “a member of the Bank’s Monetary and Financial Policy Committee, of the Bank’s Administrative Court and of the Legal Committee”.
He has “a specific responsibility within the Bank for financial stability, for the management and monitoring of financial market infrastructure and payment systems and for international affairs” and is “a member of the steering committee of the Financial Stability Board of the G20”. He is also the chairman of the Bank for International Settlements Committee on Payments and Market Infrastructures. According to the Daily Hodl report, during an interview with Sky News, Governor Cunliffe said:
I think what it [the collapse of FTX] tells you is that there is a lot of activity that has grown in the last 10 years in trading and selling crypto assets. Assets that have no value are important, so they are highly volatile. But all of them are illegal…
“What we saw and I think in FTX, that there is an ongoing investigation and I have no knowledge of what is really going on inside. But what we seem to have seen is that a lot of things behavior, which controls the money will have some security and regulations around them, so that the area is not controlled…
“Then we saw something like the customer’s money was missing, a conflict of interest seemed to have occurred between different services. Accounting, auditing, and accounting, all of which can be tedious in a typical financial institution, are not really made for this program. Suddenly, I think a lot of people lost a lot of money…
“Mending money in crypto assets like Bitcoin and others is an incredible job. Their value can go up, but it can go down… I think if people invest in that thing. they should know what they are doing, they should really know what they are buying. It is not a good investment and you can invest your money for a long time. It’s really, in my opinion, a bet…
Governor Jon Cunliffe
On November 21, 2022, Cunliffe spoke about crypto and keynote at Warwick Business’ Gilmore Center policy conference on DeFi and digital currency. Cunliffe had this to say about DeFi during his keynote:
“Some, of course, will argue that the answer is not a proper risk system in centralized crypto platforms, such as FTX, but rather the development of an informal currency of services such as lending, trading, payments, etc. are done through built-in protocol software and blockchain without permission. In such a world, it is the “code” that effectively controls risk rather than the interlocutors. And of course, there is little evidence that the failure of FTX has prompted some job transfers to non-core platforms…
“The strength and resilience of the blockchain’s decentralized authority has not been shown in scale and over time. But some of the rules themselves can carry risks – for example, the automatic termination of flexible contracts, despite the speed, does not eliminate the need for lenders to avoid the increase in sales burned down.
“Furthermore, it is unclear how widespread these platforms actually are. Behind these protocols are often companies and organizations that earn money from their work. Also, it is often not known who, in practice, controls the governance of the protocol. “In general, like autonomous cars, they only need commands, programs and sensors to coordinate their work. We will need a lot of assurance before deploying such systems on a large scale with money. “
Last May, Governor Cunliffe spoke about crypto-assets at the three-day “The Future of Everything”, hosted by the Wall Street Journal (WSJ). According to a Bloomberg report on Sir Jon’s speech, he said:
“There is a long line of retail investors who have invested in crypto-assets… Did they all understand what they invested in? I don’t think so. As for the long tail of retail investors, I’m not sure they get it. They don’t really see it as an investment.”
Check out some of his other keynotes:
“There is no value in crypto assets. They move by feeling. They are primarily traded as risky assets, and prices tend to fall fairly regularly. “
“If you have that as part of your portfolio, you’ll find it’s a great investment. You can lose all your money. You can earn a lot of money. It is important for inv