BoE governor calls for better regulation of crypto sector

Mar 03, 2018, 04:58
BoE governor calls for better regulation of crypto sector

He said they act as money only for some people and to a limited extent, "and even then only in parallel with the traditional currencies of the users".

Carney also warned that companies engaging in ICOs "will not be allowed to use semantics to avoid securities laws created to protect investors".

While, Carney acknowledged the potential value of blockchain, the underlying technology of most cryptocurrencies, he said that the digital cons themselves have failed as a form of money.

Bank of England Governor Carney tears into bitcoin in a stinging speech and interview on Friday.

Authorities in both the USA and European Union have instituted plans to apply anti-money laundering standards and anti-terrorism financing standards to cryptocurrencies in the same way that they do to other financial services products and it now looks like their counterparts in the United Kingdom are to follow suit.

The value of all major cryptocurrencies, including Bitcoin, plummeted in late 2017 and early 2018, largely due to tougher regulation internationally, and outright bans from China and other nations who view them as a threat to their financial systems.

"In part", he elaborated, "this is because they're small relative to the financial system. In comparison, at the height of the dotcom mania, the valuation of technology stocks were a third of global GDP".

William Dudley, the New York Federal Reserve president, echoed Carney's comments in remarks last month, telling reports that cryptocurrencies were experiencing a risky "speculative mania". "Authorities need to make some decisions", he explained.

Digital assets are increasingly coming under the scrutiny of regulators.

He said that included "extrapolative price expectations reliant, in part, on finding the greater fool". "And bringing crypto-assets into the regulatory tent could potentially catalyze innovations to better serve the public".

Despite this, many large exchange groups - including CME Group and Cboe Global Markets - have begun to build a professional framework for trading the assets, while employees at some of the world's best-known financial institutions have left to launch their own crypto funds.

"I trust you have gathered by now that for many reasons the crypto-assets in your digital wallets are unlikely to be the future of money".

The Bank will present a report to the G20 in Argentina later this month, with Carney hinting at greater controls and also revealing that the central bank had tested ways to use cryptocurrency technologies at the core of the British payments system.