‘One-size-fits-all’ UK crypto rules won’t prevent an FTX repeat, Ripple warns
The implosion of crypto exchange FTX has underscored the urgent need for a “comprehensive and nuanced regulatory framework” in the UK, crypto firm Ripple told City PM today.
Watchdogs globally are circling FTX and its former-billionaire founder Sam Bankman-Fried after the exchange collapsed amid a liquidity crisis last week.
Regulators in the UK have been edging into the sector in the past 18 months and are set to take on oversight of all cryptocurrencies after lawmakers tabled an amendment to the Financial Services and Markets Bill passing through parliament.
But speaking to City A.M., Ripple, which provides crypto services for businesses, said rushing into a one-size-fits-all approach to regulation in the UK would not prevent another crisis.
“To rebuild trust and ensure this does not happen again, the industry needs the clarity that is provided by appropriate regulation,” Andrew Whitworth, Policy Director at Ripple, said
“This must include robust measures for consumer protection but also recognise the different risks posed by business-facing crypto companies. One size does not fit all.”
He added that there was an “urgent need” for regulation as the market reels from the collapse of FTX.
Ripple is among a host of blockchain and crypto firms scrambling to draw dividing lines between its own business-to-business services and the customer facing firms at the heart of the crisis shaking the market.
In a report released today, Ripple proposed a regulatory framework to lawmakers that treats the different actors of the cryptoasset space “according to their own risk profiles”, as well as calling for investment in boosting the communication between regulatory bodies and the private sector.
The calls echo those of industry body CryptoUK yesterday, which told MPs that centralised exchanges needed tighter oversight to prevent a wave of further failures.
“Perhaps if we’d had some regulation, some of these recent events may not have taken place, where we’ve seen some pretty poor business practices,” Ian Taylor, executive director of industry body said.