Jon Cunliffe, the Bank of England’s deputy governor for financial stability, warned that cryptos could trigger a global financial crisis.

In a speech on Wednesday, Jon Cunliffe of the Bank of England called for tough regulations on cryptocurrencies, drawing a parallel between the $1.2 trillion subprime mortgage market in 2008 and the growth of the crypto market from a mere $16 billion five years ago to its $2.3 trillion capitalization today. (CNBC)

“When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice,” Cunliffe said.

“The crypto world is beginning to connect to the traditional financial system and we are seeing the emergence of leveraged players,” he observed.

Whether a crash in cryptos would have a knock-on impact on the real economy would depend on the extent of their interconnectedness and leverage.

Both of these factors were present in the subprime mortgage market before 2008, and they contributed to bringing the global economy to its knees in the ensuing meltdown, Cunliffe said.

On the other side of the pond…

Talking of regulation, in the U.S., crypto exchange Coinbase (NASDAQ: COIN) on Thursday called for a comprehensive reform of U.S. federal regulation of digital assets through a dedicated and new agency operating under a framework separate from that used to oversee the traditional financial services sector.

“There should be one federal regulator designated for digital asset markets,” Faryar Shirzad, chief policy officer at Coinbase, told reporters. “A digitally native and dynamic regulator would help ensure that the transformation of the financial system serves as many members of the American public as possible.”

CoinBase’s proposal is available to view here.

“Forcing the full spectrum of digital assets into supervisory categories codified before the use of computers risks stifling the development of this transformational technology, thus pushing offshore the innovative center of gravity that currently sits in the United States,” says the proposal.

“Doing this will have profoundly harmful economic implications and undermine the United States’ leadership at a time when technology is so critical to this country’s geopolitical strengths.”

Related Story: $500M Of Cryptocurrencies (Or More) To Replace Fiat On Coinbase’s Balance Sheet

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