Bank of England’s deputy governor for financial stability, Sir Jon Cunliffe, has warned that the price of cryptocurrencies, including bitcoin, could fall to zero. Noting that the crypto industry is “growing very fast,” he stressed: “We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks.”
Bank of England’s Deputy Governor Warns Crypto Prices Could Tank to Zero
Sir Jon Cunliffe, Bank of England’s deputy governor for financial stability, warned about cryptocurrencies becoming worthless Tuesday on the BBC’s Today program.
Cunliffe began by acknowledging that cryptocurrencies have been “growing very fast,” and are becoming mainstream. He stressed that at this growth rate, they could pose a danger to the established financial system even though only about 0.1% of U.K. households’ wealth is currently in cryptocurrencies. An estimated 2.5 million U.K. residents own cryptocurrency, with an average value of around 300 British pounds (397).
Further, the Bank of England’s executive pointed out that many financial professionals (such as fund managers) want to be able to determine whether or not cryptocurrencies should make it into their portfolios.
According to the deputy governor, if cryptocurrency’s value falls sharply it can have an adverse effect on other currencies. He stressed that the Bank of England should be ready to deal with these risks. He stressed:
They can be very expensive and could drop down to practically nothing.
“The point, I think, at which one worries is when it becomes integrated into the financial system — when a big price correction could really affect other markets and affect established financial market players,” Cunliffe opined.
It isn’t the first warning that the Bank of England deputy Governor has made about cryptocurrency losing its value. Cunliffe, who warned crypto that it could crash, called on regulators in October to create a framework to regulate them.
“It’s not there yet, but it takes time to design standards and regulations,” he additionally told the BBC. “We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks.”
Cunliffe also warned previously about the potential dangers cryptocurrencies could pose to financial stability. He stated that cryptocurrency were not large enough to be a threat to financial stability in July. He said in November that cryptos are becoming more of a danger.
The Bank of England published the following statement in its Financial Stability Report, Monday.
Cryptoassets present limited risks for UK financial stability. If they keep growing at the rapid rate they are, or become interconnected to other financial systems, there will be financial stability risk.
What do you think about Sir Jon Cunliffe’s comments about bitcoin and crypto? Comment below.
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