Bitcoin to Pose Financial Stability Risk, Bank of England Deputy Governor Warns | Currency News | Financial and business news

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Bank of England Deputy Governor for Financial Stability Sir Jon Cunliffe arrives for a meeting of the Special Treasury Committee at Portcullis House on March 8, 2016 in London.

Photo by Ben Pruchnie / Getty Images

Crypto assets like bitcoin are poised to pose a risk to financial stability, a senior Bank of England official has warned. Because cryptos grow very quickly, they are integrating more and more into the financial system, Jon Cunliffe said. Regulators and lawmakers need to “think very seriously” about the looming risks, he said. Sign up here for our daily newsletter, 10 things before the opening bell.

Crypto assets like bitcoin are changing so rapidly that they are increasingly becoming a potential threat to the global financial system, warned Bank of England Deputy Governor Jon Cunliffe.

“On the issue of bitcoin and other crypto assets and their value, my judgment is that they do not presently pose a risk to financial stability,” he said, speaking in an interview. on BBC Radio 4 Monday.

“But they are growing very quickly, and they fit more into what I might call the traditional financial system,” he added.

“So the point at which they present a risk is approaching, and I think regulators and lawmakers need to think about it very seriously.”

Crypto assets have exploded in popularity, and their total market capitalization has grown from $ 463.4 billion a year ago to $ 2.8 trillion today, according to data from CoinGecko. But regulators are still working on making rules to monitor developments in the space.

Cunliffe has already raised a red flag on what happens if the generally high volatility of cryptocurrencies spills over into traditional markets. He said in October that a crash in the crypto markets was plausible.

The International Monetary Fund warned the same month of the dangers of excessive speculation and the potential for a “run” on apparently stable assets.

But Cunliffe also said the UK’s central bank has started to find ways to manage risk in decentralized finance, where peer-to-peer transactions on the blockchain provide financial services without a bank or intermediary broker.

The BoE has started talking to the financial industry and tech companies about whether to issue its own cryptocurrency, a digital book dubbed “Britcoin.” But the central bank’s digital currency, or CBDC, is unlikely to launch before 2025.

Even so, Cunliffe told Radio 4 that the central bank’s digital currency, or CBDC, could “anchor and hold our monetary system together.”

“The way we live and the way we deal is changing all the time. Our lives (…) are becoming more and more digital. And as that happens, the way we use money and the money we hold changes, ”the vice governor said.

“The question is whether the large corporate public, households should really be able to use and hold the safest money, which is Bank of England money, in their day-to-day lives. “

Cunliffe also pointed out that Facebook’s digital money plans, whose stablecoin Libra is now known as Diem, are not yet a concern for US regulators.

“There are proposals from new players that are not banks, including some of the big tech platforms and some of the social media platforms to come out into the world and issue their own money,” he said. he declares.

“But I think these proposals don’t exist on a large scale yet. So I don’t think we’re behind here on the regulation and management of crypto assets.”

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