Mark Carney launched a scathing attack on digital currencies such as bitcoin, ethereum and ripple at a a conference this morning.
The Bank of England Governor called for regulation to hold cryptocurrencies to the ‘same standards as the rest of the financial system’.
In a speech delivered to the inaugural Scottish Economics Conference in Edinburgh, Mr Carney branded cryptocurrencies a ‘failure’, a ‘lottery’ and said they exhibit the ‘classic hallmarks of bubbles’ that attract ‘fools’.
Mark Carney: The Bank of England Governor says that cryptocurrencies need more regulation
He said: ‘The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool.
‘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 international sanctions.’
His comments come as bitcoin’s value continues to swing wildly, having rocketed to nearly $20,000 late last year before plunging. Today, the price sits at just below $11,000.
A host of regulators including in South Korea, China, Russia and India have already expressed concern about bitcoin, while Germany’s Bundesbank has also called for global regulation.
Mr Carney added: ‘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.
‘The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.
‘Being part of the financial system brings enormous privileges, but with them great responsibilities.’
The Bank is assessing the risk cryptocurrencies pose to the financial system (PA)
The Bank’s Financial Policy Committee is carrying out a study into the risks posed to UK financial stability by cryptocurrencies.
However, the Governor insisted that, in his view, crypto-assets do not ‘appear to pose material risks to financial stability’.
The Bank chief also conceded that the distributed ledger technology which underpins cryptocurrencies can act to help the way payments are made evolve.
‘Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems.
These must now evolve to meet the demands of fully reliable, real-time, distributed transactions.
‘The Bank believes that distributed ledger technology could over time significantly improve the accuracy, efficiency and security of processes across payments, clearing and settlement,’ he said.