The BOE governor has launched a stinging assault on crypto asserts urging for strict regulation of cryptocurrencies to end their era of anarchy. He said only regulation can hold them to “same standards as the rest of the financial system”.
He made these remarks during the inaugural Scottish Economics Conference that was held in Edinburgh. He brands the cryptos as a failure and a lottery which bears the classic hallmarks of bubbles that attract fools.
“The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool.”
“At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions.”
These comments come as the price of different crypto assets keeps swinging wildly. Towards the end of 2017 coins like Bitcoin peaked at price to almost $20, 000 before tumbling down at the start of this year and settling at $10, 890 as of this Friday.
BOE is the latest institution to voice concerns about cryptos. This year a host of institutions like JPMorgan and a number of governments have talked of regulation of cryptocurrencies including China, South Korea, India, and Russia.
The governor adds:
“A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system.”
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”
“Being part of the financial system brings enormous privileges, but with them great responsibilities.”
The BOE financial policy team is carrying out a study that seeks to understand the risks posed by cryptocurrencies on the stability of UK financial system.
However, he has kind words for the blockchain technology. He says:
“Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems. These must now evolve to meet the demands of fully reliable, real-time, distributed transactions.
“The Bank believes that distributed ledger technology could over time significantly improve the accuracy, efficiency, and security of processes across payments, clearing, and settlement,”
In the comment section below let us know what you think of these scathing comments by the BOE governor on cryptos. Is regulation of cryptocurrencies the way forward? And, Are crypto investors really fools?