BOE's Carney Calls for Rules to End Cryptocurrency Anarchy

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Carney said cryptos are too volatile to operate well as a system of money

"At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and worldwide sanctions", he said.

Carney expressed doubts about cryptocurrencies earlier this year.

Although some countries have banned them, Mr Carney said regulation would be a better approach. The price of bitcoin - the most popular - rose from $1,000 to nearly $20,000 in 2017 but has roughly halved so far this year: it is trading at around $11,000, according to Coindesk.

Bank of England governor Mark Carney laid down the law today with a withering assessment of Bitcoin's qualifications to be described as money and a warning that, if allowed to grow unchecked, it could threaten financial stability. "At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and worldwide sanctions".

When I asked him whether we will see cryptocurrencies being regulated, he answered: "You will - they will be regulated in my view". But they needed to be regulated in a similar way to other parts of the financial system, and could not replace traditional currencies.

Crypto-currency trade body Crypto UK said it supported new regulation, but said that policymakers should not try to adapt existing financial rules to digital currencies.

Carney also outlined some of the potential advantages of cryptocurrency, the underlying technologies of which he described as "exciting".

Of course, Bitcoin largely came about because Carney's financial system wasn't particularly "safe and sound" - at least, not for all those who lost their homes and jobs during the 2008 Financial Crisis, which ultimately saw many traditional financial institutions rewarded for actually failing.

The Bank will present a report to the G20 in Argentina later this month, with Carney hinting at greater controls and also revealing that the central bank had tested ways to use cryptocurrency technologies at the core of the British payments system.

Carney addressed the 2018 Scottish Economics Conference in London.

The central bank chief added that he is not against the innovation provided by cryptocurrencies, however, and argued that regulation would be of benefit to the industry, as well as consumers.

Digital currencies can allow anonymous transactions and carry risks including money laundering, terrorism financing and tax evasion. They now operate in murky legal territory and a year ago led SEC Chairman Jay Clayton to warn investors that "tales of fortunes" spun by companies may not always be true.

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