Bank of England Backs Sunak’s Crypto Dreams Despite Market Crash
In an interview with Sky News, Sir Jon warned that many coins were little more than a “bet” and most were “of no intrinsic value”.
However, he added that crypto trading should be regulated rather than banned.
Sir John said: “There are people who want to engage in this business.
“As long as they do it with their eyes wide open in a safe place, there’s no money laundering or illicit financing, and it’s not charged against them, then we should give them the minus the possibility of doing so.”
Mr Sunak said earlier this year he wanted to make the UK a “tech hub for crypto-assets” and the Treasury launched a consultation on how the industry should be regulated.
Asked about the plan, Sir Jon said regulation was needed to make it a “safe ambition”.
He added, “If we want to get sustainable innovation, things that are really useful and can last, developers need to know what the regulatory framework is.”
The Bank is also continuing its work on a possible digital currency, dubbed Britcoin, which could one day be used instead of cash. A consultation will take place next year.
Sir Jon said: ‘We have led a task force jointly with the Treasury – so it’s between the Bank of England and the government working together on innovation.
The digital coin market was worth around £1.8 billion at the start of 2022 and had fallen to around £800 billion by the end of the year.
The Bitcoin price fell from over £35,000 to under £14,000 in the space of 12 months.
Speculators and professional investors withdrew huge sums from the cryptocurrency markets as a series of industry scares and a “crypto winter” gripped the digital coin markets.
The latest shockwave to hit the industry was the implosion of the allegedly fraudulent exchange FTX, which caused investors to flee digital coins again. FTX, the world’s second-largest digital coin exchange based in the Bahamas, filed for bankruptcy in November after finding an $8bn (£6.7bn) black hole in its accounts.
Sir Jon said the failure of FTX was not big enough to swing global markets, but future meltdowns might.
He said: “Trade in crypto assets was not big enough to destabilize the financial system, but it was starting to develop ties.”
“We had banks and investment funds and others who wanted to invest in it and I think we should think about the regulation before it becomes part of the financial system and before we can have a potential systemic problem. .”
Sam Bankman-Fried, the founder of FTXappeared in US court on Thursday to face fraud charges and was released on bail for a record $250 million.
Interest in cryptocurrencies increased in 2021 as financial institutions began to dip their toes into coins, such as when Tesla acquired $1.5 billion worth of Bitcoin.
However, over the past 12 months, a broader sell-off in tech stocks and a relentless catalog of industry scandals have shattered confidence in many cryptocurrencies.
Other cryptocurrency companies have also gone bankrupt. Celsius, a digital coin lender, filed for bankruptcy in July with a $1.2 billion hole in its balance sheet. Elsewhere, a $40 billion cryptocurrency, Terra-Luna, crashed to near zero over the summer.
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