A senior official in the Bank of England has recently come out against the rapidly-growing global cryptocurrency industry. Sir Jon Cunliffe, the Bank of England’s deputy governor, said that despite the wealth of most UK households being in assets apart from cryptos, the growth of cryptocurrencies presents a clear danger.
In recent times, cryptocurrency companies around the world have been investing millions to help the industry merge with the mainstream. This has made more people aware of cryptocurrencies, with many becoming interested in investing in them. Stories of individuals who have made millions overnight through cryptocurrency investments have also acted as encouragement for new investors.
However, according to Sir Jon Cunliffe, there’s always a risk of cryptocurrency values falling sharply, which are likely to result in huge losses for investors. The Bank of England deputy governor also warned that if cryptocurrencies become integrated into established financial systems, drastic falls in their values may have a destabilizing effect on other markets.
Sir Jon Cunliffe stressed the importance of having a regulatory framework in place to prevent the risks of cryptocurrencies from growing bigger. He admitted that designing the rules and regulations will not happen quickly as it’s likely to take a lot of time and discussion to frame them.
In recent months, governments of nations around the world have realized the importance of regulating cryptocurrencies. Earlier this year, China initiated a crackdown against crypto miners in the country. Right now, India is on the verge of passing a crypto bill that will see private cryptocurrencies banned. However, 2021 also saw El Salvador legalize Bitcoin as legal tender.
