'Fools' attracted to cryptocurrencies like Bitcoin, warns BoE chief Mark Carney

Randall Padilla
March 3, 2018

Of course, Bitcoin largely came about because Carney's financial system wasn't particularly "safe and sound" - at least, not for all those who lost their homes and jobs during the 2008 Financial Crisis, which ultimately saw many traditional financial institutions rewarded for actually failing.

Crypto-currencies do not yet pose risks to financial stability, he said. Carney said that, in order to secure market integrity and for protecting the investors, crypto-asset exchanges should be exposed to the same set of rigorous standards as that of trade securities. In the same vein, Carney said cryptocurrencies need not be banned as they pose no material risk to the whole financial system, but they must be regulated.

If the world of crypto-currencies such as Bitcoin are the Wild West, a new sheriff just swaggered into town.

The Bank of England's Financial Policy Committee is now considering the risks posed to United Kingdom financial stability by the proliferation of virtual currencies.

Sheriff Carney says it fails as money because it is wildly volatile, poorly understood, inefficient and not widely accepted.

Nicky Morgan, the chair of the committee, warned that people are becoming increasingly aware of crypto currencies, "but they may not be aware that they are now unregulated in the United Kingdom, and that there is no protection for individual investors".

"Crypto has the potential to be hugely disruptive to the major financial centers, which is partly behind the heavy-handed response from Mark Carney". Blockchain technology could be used to make payments more flexible, efficient and reliable, for example.

"They point the way to where the system has to go" by allowing peer-to-peer transactions, he said. He also rejected the prospect of a central bank digital currency in the near future.

This week, the European Union's financial services chief said Brussels was ready to regulate cryptocurrencies if risks from the sector are not tackled at the global level.

However, Carney said regulations would be done on a country-by-country basis initially.

He cited moves to bring cryptocurrency exchanges within the scope of anti money laundering (AML) rules in the European Union and USA as an example of the regulatory approach being taken in some jurisdictions, and further backed the treatment of "crypto-assets" as securities.

"This shouldn't be viewed as a crackdown, but an opportunity to establish parameters that protect consumers while encouraging the biggest and best crypto-currency businesses to make the United Kingdom their home", a spokesperson said.

Other reports by AllAboutTopnews

Discuss This Article