Bank of England (BoE), the UK’s central bank, warned consumers about the risks of using decentralized finance (DeFi) protocols shortly after the crypto exchange FTX collapsed. The warning from the central bank was given in a speech by Deputy Governor of the Bank of England, Jon Cunliffe. According to Cunliffe, there are three reasons why it is essential to regulate crypto-related activities now.

The first reason is to protect consumers and investors, and to make sure that crypto can be traded on “transparent, fair and robust marketplaces.”  The second reason pointed to by Cunliffe was related to financial stability, and a need to protect the traditional financial system from risks arising from crypto. Lastly, Deputy Governor Cunliffe pointed out that regulation could also be used to foster further innovation in the crypto space, and that these innovations could potentially also benefit traditional finance.