Sir Jon Cunliffe is the Bank of England’s deputy governor of financial stability. He warned that cryptocurrencies could drop to zero. He noted that the crypto industry “is growing very quickly,” and stressed that “we really need to get our hands dirty and get on it.” “We have the regulatory framework to limit the risks, so we can’t wait until this becomes a bigger issue,” he said.
The Bank of England’s Deputy governor warns that crypto prices could plummet to zero
Sir Jon Cunliffe is the Bank of England’s deputy Governor for Financial Stability. He warned Tuesday about cryptocurrency becoming worthless on BBC’s Today program.
Cunliffe started by acknowledging that cryptocurrency has been “growing very quickly” and are now mainstream. Cunliffe stressed that cryptocurrencies could be a threat to the existing financial system at such a rapid growth rate even though only 0.1% of U.K. households have cryptocurrency wealth. An estimated 2.3 million U.K. citizens own cryptocurrencies. Each holds an average of 300 British Pounds HTML1.
A Bank of England executive also stated that financial professionals such as fund managers want to know if cryptocurrencies should be included in their portfolios.
He warned that a sharp fall in cryptocurrency’s value could cause a ripple effect. The Bank of England must be prepared to manage those risks. He stressed:
They can be very expensive and could theoretically or actually drop to zero.
Cunliffe stated that “the point at which one worries, I think is when it becomes integrated in the financial system — when big price corrections could really affect other markets, and affect established financial market participants.”
The Bank of England deputy governor warned that cryptocurrencies could lose their value. This is not the first warning. Cunliffe warned that crypto could crash in October and urged regulators to quickly establish a regulatory framework.
He also stated that while it is not yet complete, regulations and standards take time to develop. “We need to get our hands dirty and do what we can to make sure that this doesn’t become a bigger problem.
Cunliffe also warned previously about the potential dangers cryptocurrencies could pose to financial stability. He stated that cryptos weren’t large enough to be a threat to financial stability in July. He said in November that cryptos are becoming more of a threat.
The Bank of England published Monday’s Financial Stability Report.
Cryptoassets present limited risks to UK financial stability. They could pose a risk to financial stability if they grow at the current pace and become more interconnected with other financial systems.
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Kevin, a student of Austrian Economics and evangelist since then. His interests include Bitcoin security, open source systems, network effects, and the intersection of cryptography and economics.
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