Bank of England’s Carney calls for crypto regulation

Mark Carney says time has come for cryptocurrencies to be held to same regulatory standards as the rest of the financial system.

The governor of the Bank of England has stated cryptocurrencies such as Bitcoin should be held to the same regulatory standards as the rest of the financial industry. 

In a speech at the Scottish Economics Conference, Mark Carney explained taht authorities need to decide whether to isolate, regulate or integrate crypto-assets to protect investors. 

“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” he said. “Being part of the financial system brings enormous privileges, but with them great responsibilities.” 

However, Carney warned that isolation of cryptocurrencies risks foregoing the potential opportunities from the development of blockchain, the underlying payments technology. 

“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 added.  

Carney also explained cryptocurrencies “have exhibited the classic hallmarks of bubbles”, with Bitcoin showing serious deficiencies and poor short-term stores of value. 

Although he said at present he does not believe crypto-assets pose material risk to financial stability as they are small relative to the financial industry and UK institutions currently have minimal exposures to the ecosystem. 

“The Bank of England’s FPC is currently considering the risks posed to UK financial stability. And internationally the Financial Stability Board will report to the G20 in Argentina later this month on the financial stability implications of crypto-assets,” Carney said. 

Institutional interest in cryptocurrencies peaked recently after major exchange groups launched Bitcoin futures products. However, progress has been difficult with US authorities recently halting the prospect of Bitcoin exchange-traded funds (ETFs) due to concerns around liquidity and valuation.