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BoE’s Cunliffe believes crypto will continue to grow

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Speaking at the Point Zero Forum in Zurich, Bank of England (BoE) Deputy Governor for Financial Stability John Cunliffe said that the current crypto market reminded him of the early days of the Internet. Just like Amazon and eBay that didn’t leave the internet space when it fell, those who don’t leave crypto today will rise just as they did.

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He said:

“The analogy for me is the dot-com boom, where $5 trillion was wiped from value. Many companies have left, but technology has not disappeared. Those who survived – Amazon and eBay – turned out to be the dominant players.”

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Like many prominent crypto analysts and executives, Cunliff does not believe this is the end, no matter how bad things look in the crypto space.

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He expressed his confidence in the cryptocurrency by saying:

“I expect crypto and finance to continue to exist because it can bring tremendous efficiencies and change the structure of the market.”

Bank of England about cryptocurrency: “good, but too volatile”

Previously, representatives of the Bank of England spoke favorably about the cryptocurrency, but with caution. While acknowledging the rapid growth of its industry, the Bank of England appears to be concerned about price volatility as it poses a serious threat to an established financial system.

Andrew Bailey

In November 2021, when El Salvador adopted bitcoin as legal tender, the Bank of England was one of the institutions that publicly criticized the country’s decision.

The head of the Bank of England, Andrew Bailey, said that a two-currency system involving bitcoin is problematic due to its volatility. Bailey said:

“What worries me the most is whether the citizens of El Salvador understand the nature and volatility of the currency they own.”

Even though schools have been established in El Salvador to educate the public about bitcoin, once they have accepted it as legal tender, there is no guarantee that every Salvadoran citizen is a bitcoin expert.

Expressing his concerns about volatility, Bailey mentioned stablecoins and said that these are strong arguments in favor of El Salvador only in the case of stable currencies.

June Cunliff

John Cunliff said that the cryptocurrency is growing too fast and could threaten the traditional financial system in December 2021. He noted that the cryptocurrency would be good for the financial system if it was included, but so far this has not happened.

He noted that prices could drop to zero very quickly. If cryptocurrencies are included in the traditional financial system, banks must be prepared to reduce all risks for the population and the economy as a whole.

Rules in the region

A recent study showed that 93% of British politicians have no idea about digital assets. There are no legal rules or proposals for the crypto space.

In 2019, the UK Financial Conduct Authority (FCA) made all crypto companies responsible for complying with anti-money laundering (AML) requirements. However, only a few applied for registration.

The most recent regulatory development came from the Bank of England in March 2022 when it announced that it was working on a crypto regulatory framework.

The central bank seeks to create “an effective public policy framework to maintain broader trust and integrity in the financial system” with this regulation.

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