Bank of England governor Mark Carney is not at all happy with Cryptocurrencies and is concerned with Cryptocurrency mania. Carney wants to crackdown on Cryptocurrencies, such as Bitcoin, who he thinks needs to be controlled to stamp out illegal activities and protect the financial system! Carney believes digital currencies investments could lose money due to intrinsic risks and said on Friday:
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”
He went on to say the financial stability does not yet have to worry about Cryptocurrencies but if more people invest then that situation could quickly change. Carney does however believe that regulation is the way ahead and not banning cryptocurrencies as some countries have.
“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,” he said.
So is governor worried? Is he thinking that the banks, for so long in a ‘nice safe comfort zone,’ are now exposed and that some will fall through the safe cracks in time? Well he certainly could be and as the governor he might feel the time has come for him to make a stance and lay down some laws. He doesn’t want to witness the likes of Bitcoin being allowed to develop unchecked as it could put financial stability in danger.
Carney commented that Cryptocurrencies are total failures as money because they are:
- Wildly Volatile.
- Poorly Understood.
- Not Widely Accepted.
Mr Carney also said:
“Digital currencies threaten stability because people may invest substantial amounts – mistakenly believing they are regulated – causing further loss of faith in the financial system if they collapse.”
Are Banks Nervous?
Obviously this is Carney sticking up for his financial world that Bitcoin is now threatening to gate crash. But the banks have had their cake and eaten it for so long and now, with uninvited guests about to enter their world and take their slice of cake, the defensive shutters are coming into play.
Will Digital Currencies keep pushing full steam ahead?
China has cracked down hard on crypto-currencies, banning initial coin offerings and shutting down Bitcoin exchanges. Indonesia and Bangladesh have banned Bitcoin as a payment tool, and India’s central bank has issued a number of warnings about Bitcoin risks.
However, Mr Carney said that the technology on which crypto-currencies are based “could potentially catalyze innovations to serve the public better”.
Blockchain technology could be used to make payments more flexible, efficient and reliable.
“They point the way to where the system has to go” by allowing peer-to-peer transactions, he said.
He said the Bank “has an open mind” about the eventual development of a central bank digital currency, but he said it “shouldn’t be a solution in search of a problem or an effort of central bankers to be down with the kids”.
Digital currencies can allow anonymous transactions and carry risks including money laundering, terrorism financing and tax evasion.
But in terms of regulation, “if there’s a will there’s a way”, Mr Carney said. “It’s relatively straightforward.”
Cryptocurrency trade body Crypto UK said it supported new regulation, but said that policy makers should not try to adapt existing financial rules to digital currencies.
“This shouldn’t be viewed as a crackdown, but an opportunity to establish parameters that protect consumers while encouraging the biggest and best cryptocurrency businesses to make the UK their home,” a Crypto UK spokesperson said.