“The point, I think, at which one worries is when it becomes integrated into the financial system when a big price correction could really affect other markets and affect established financial market players,” Sir Jon Cunliffe, deputy bank governor, told the BBC.
“It’s not there yet, but it takes time to design standards and regulations,” he added.
Sir Cunliffe also said that this risk will grow if and when the crypto industry becomes more widely adopted. Right now, the deputy bank governor said only 0.1% of UK households’ wealth was in cryptocurrencies. What’s more, only 2.3 million people in the UK were estimated to have crypto-related investments, at an average value of £300 ($396.94) per person.
“We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks,” he also said.
Bank of England and Crypto
This is not the first time the British central bank has weighed in on the risks posed by the crypto industry.
In October, the bank—and Sir Cunliffe himself—said could trigger financial instability in the UK.
“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 instability problems,” he said at the time.
Just one week later, the bank weighed in again, although this time with a seemingly contradictory message.
“Crypto asset markets continue to grow rapidly, but currently pose limited risk to UK financial stability,” the Financial Policy Committee of the Bank of England said.
The bank has also taken aim at El Salvador, lamenting what it observes as a questionable embrace of Bitcoin as legal tender.
“It concerns me that a country would choose [Bitcoin] as its national currency,” the governor of the bank, Andrew Bailey, said last month.