Better regulations are needed to protect the financial system after the collapse of the FTX cryptocurrency exchange, a senior Bank of England official has said.

Digital currencies are still too small to pose a threat but that will soon change, said Sir Jon Cunliffe.

FTX filed for bankruptcy last week and owes its largest creditors almost $3.1bn (£2.6bn).

Thousands of its users are also waiting to get their money back.

Sir Jon, who is deputy governor for financial stability at the Bank, also said the recent volatility in the value of cryptocurrencies posed a threat.

The value of Bitcoin, the world’s largest digital currency, has dived by almost 70% in the last year.

He said the crypto world was, at present, not “large enough or interconnected enough with mainstream finance to threaten the stability of the financial system”.

But he said its links with mainstream finance were developing rapidly.