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BoE Deputy Governor says crypto is not a ‘financial stability risk’

BoE Deputy Governor says crypto is not a ‘financial stability risk’
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Bank of England’s Deputy Governor Jon Cunliffe commented on crypto’s market status, saying it is not a financial stability risk as it does not pose relevant competition to the traditional markets, yet.

He agreed with and appreciated crypto’s exponential growth however he clarified that it cannot beat the regulated market and he does not see it as a threat.

“The speculative boom in crypto is very noticeable but I don’t think it’s crossed the boundary into financial stability risk,” Cunliffe told CNBC.

Volatile Crypto is a Retailer’s choice, not an institutional preference

Cryptocurrency’s volatile nature leads to extreme outputs. The final product line either shoots North or drops down South. In the seven months of 2021, the crypto market has hiked as high as $2.5 trillion, during the first quarter, and has also faced unexpected losses of over $1 trillion in value since May. Bitcoin is standing at $32,500 today having lost nearly 50% from its ATH of near $65Kin April.

However, Cunliffe claimed that cryptocurrency’s popularity is not relevant to the traditional markets as it is only limited to retail investors and that institutions have yet not shown any collective interest.  

“There are issues of investor protection here. These are highly speculative assets…But they’re not of the size that they would cause financial stability risk, and they’re not connected deeply into the standing financial system…Were we to start to see those links develop, were we to start to see it move out of retail more into wholesale and see the financial sector more exposed, then I think you might start to think about risk in that sense,”, Cunliffe told CNBC.

Regulators & Crypto Crackdown

Regardless of crypto’s wonder days, regulators still see endless wandering through the woods to find an unguaranteed treasure. For instance, the rapid and roaring Chinese Crypto crackdown was unsurprising to the traditional market players.

China’s regulators sought the crackdown as a cleanse against the unprotected, unsustainable, and unregulated cryptosystem. Furthermore, organizations like Binance, that is the world’s largest crypto trade and exchange platform, is also stuck in a series of regulatory trouble in several nations, including the UK.

Binance operations were banned by the Financial Conduct Authority (FCA) in the UK during June, instead of Binance’s failure of meeting the UK’s anti-money laundering requirements. 

The post BoE Deputy Governor says crypto is not a ‘financial stability risk’ appeared first on Coingape.

 

Source: Coingape

 

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