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Despite “huge enthusiasm” by U.K. institutional investors, the governor of the Bank of England has reiterated his caution about cryptocurrencies.
The rapidly the success of cryptocurrency among U.K. residents has caused many politicians, including Bank of England Governor Andrew Bailey, to revive demands for legislation, including his yesterday labelling digital assets “dangerous.”
“I’m skeptical about crypto assets, frankly, because they’re dangerous, and there’s a huge enthusiasm out there,” Bailey told the British Parliament’s Treasury Committee, according to Reuters.
The recent remark is also the newest in a long line of his antipathy against cryptocurrencies. Bailey reported in October that it is impossible to accept Bitcoin as a payment form.
“It is difficult to see Bitcoin having what we call intrinsic value,” Bailey said at the time, adding, “It may have extrinsic value in the sense that people want it.”
Another quotable criticism of cryptocurrencies came from Bailey a year ago: “If you want to buy Bitcoin, be prepared to lose all your money,” he stated. He echoed this position in January, claiming that Bitcoin and other cryptocurrencies would not last.
Regulations must cut a balance
Meanwhile, TheCityUK, a lobby group for the British finance industry, argued that England must speed up its efforts in creating a regulatory framework for cryptocurrencies that would help protect retail investors, Bloomberg reported yesterday.
“Government and regulators have an important part to play. They must set safe and robust rules for this burgeoning sector—while ensuring they don’t inadvertently squash good ideas before they can mature and flourish,” said TheCityUK CEO Miles Celic.
Companies who wish to sell cryptocurrencies to ordinary customers, according to the association, should be supervised and need to obtain proper authorisation. According to TheCityUK, almost 10 million citizens in the United Kingdom now own any cryptocurrencies, representing a 558 percent rise over 2018.
However, the government’s reaction need not be too harsh in order for crypto-related firms to stay enticing, according to the lobbying organisation. According to TheCityUK, “there are some market perceptions that the United Kingdom is beginning to lag in comparison” to other countries’ crypto regulations.
The Financial Conduct Authority (FCA), Britain’s top financial regulator, has already banned the sale, marketing, and distribution of crypto derivatives. In January, it wrote that “These products [are] ill-suited for retail consumers due to the harm they pose.”