BoE Boss Calls for Crypto Regulation

March 3, 2018

BoE chief Mark Carney said in a speech the cryptocurrency market needed regulation in order to protect the financial system.

Bank of England (BoE) governor Mark Carney said in a Friday speech it was time to regulate Bitcoin and other cryptocurrencies to curb illicit activities. He also noted that digital currencies were failing as a form of money and warned about the losses investors could suffer because of the crypto-related risks.

At the inaugural Scottish Economics Conference, Carney said the “time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”

According to him, cryptocurrencies don’t pose any risks to the financial system as of today, but the situation could take a turn for the worse as more and more people enter the crypto space.

Even though some countries have completely banned crypto exchanges and transactions, Carney noted that regulation might be a more reasonable strategy.

“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. Being part of the financial system brings enormous privileges, but with them great responsibilities,” he said.

Carney lauded the potential of the technology backing Bitcoin but tried to distinguish it from the cryptocurrency itself, saying that the latter has not succeeded as a form of money. For this reason, he opposes the idea of a digital currency issued by the central bank, at least for the near future. However, he stressed that the BoE would consider this option when the right time comes.

“For many reasons the crypto-assets in your digital wallets are unlikely to be the future of money. But that is not meant to dismiss them. Their core technology is already having an impact. Bringing crypto-assets into the regulatory tent could potentially catalyze innovations to serve the public better,” Carney said.

Currently, the central bank’s Financial Policy Committee (FPC) is assessing the influence of cryptocurrencies on UK markets. Carney said the FPC would report to the G20 at a meeting planned for this month.

We reported in January that the BoE had set up a research group to study the possibility of issuing a cryptocurrency backed by the pound.

Last week, Carney said that Bitcoin didn’t have the aspects of a currency given that it couldn’t store value and provide convenience in paying for goods.

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