Crypto Assets May Present Risk to Financial System Soon, Bank of England Governor Warns

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Crypto assets like bitcoin could soon pose a risk to the wider financial system, a Bank of England deputy governor has warned.

Jon Cunliffe said regulators need to have the right regulations in place.

The point at which [crypto assets] to pose a risk comes closer. I think regulators and lawmakers need to give it serious thought, Mr Cunliffe told the BBC.

When it comes to crypto asset management regulations, we need to start working to make sure the regulations are there.

Cryptocurrency markets have reached nearly $ 3 trillion ($ 2.2 trillion), according to the Coin Market Cap website which tracks the value of digital coins.

There is growing concern of potential harm to ordinary investors who have little recourse if they fall victim to scams, fraud or market manipulation.

Regulators have been slow to respond to the rapid rise in crypto, but are starting to realize the dangers.

This month, a report by a US Treasury Department body named stablecoins a type of digital asset believed to be tied to the value of a traditional currency as one of the biggest threats to the financial system. .

The Presidents’ Task Force on Financial Markets has recommended urgent legislation to ensure that issuers of stablecoins are regulated like banks.

U.S. regulators have taken a stronger stance on stablecoins, including Tether, the largest asset by far with some $ 76 billion in tokens in circulation.

Tether the company behind the eponymous stablecoin reached multi-million dollar settlements this year with the New York Attorney General (NYAG) and the Commodities and Futures Trading Commission (CFTC). Both organizations discovered that Tethers’ claim that his currency was fully backed by US dollars held in reserve was not true.

Tether is also reportedly under investigation by the Securities and Exchange Commission (SEC). The company and its leaders deny any wrongdoing.

Bank of England Governor Andrew Bailey warned last year that crypto assets could be worthless and investors risk losing all the money they invested

The Bank plans to launch a consultation next year on creating its own digital currency, dubbed “Britcoin”.

The bank will work with the Treasury to judge the need for a UK central bank digital currency (CBDC), she said in a statement last week. However, he said no currency would exist until 2025 at the earliest.

The consultation will consider what further work needs to be done to develop the technology needed to support digital currency.

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