- Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England, has said Bitcoin could lead to financial instability.
- His comments are broadly similar to the stance adopted by the Financial Conduct Authority.
Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England (BoE), has said —and other cryptocurrencies generally—could cause a financial crisis unless they face tough government-led regulations.
Sir Cunliffe says this is true despite the fact the crypto industry accounts for only a small percentage of global finance.
“Of course $2.3 trillion needs to be seen in the context of the $250 trillion global financial system. But as the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems,” Sir Cunliffe reportedly said.
Is crypto a risk, or not?
Sir Cunliffe’s comments have been made in stark contrast to a previous BoE statement, made just six days ago.
Last week, the BoE’s Financial Policy Committee (FPC) suggested that crypto markets only posed a “limited risk” to the UK.
“Crypto asset markets continue to grow rapidly, but currently pose limited risk to UK financial stability,” the FPC said.
The varying perspectives adopted by the deputy governor and FPC suggest the BoE is not fully clear on the level of risk—and the urgency of those risks—posed by cryptocurrencies.
However, Sir Cunliffe is not alone in issuing an urgent warning about the crypto industry.
Sir Cunliffe’s crypto warnings echo some of the same anxieties displayed by the Financial Conduct Authority (FCA), the UK’s financial services regulator.
In January of this year, the FCA issued a consumer warning against cryptocurrencies, listing five entirely reasonable concerns about the industry, ranging from consumer protection to price volatility.
“If consumers invest in these types of products, they should be prepared to lose all their money,” the FCA said.
Across the pond, many of the same sentiments are shared by Gary Gensler, SEC chairman, who has frequently made the case for tough consumer protection laws in the industry.