Bank of England to take ‘Strong Approach’ to Cryptocurrencies
The deputy governor of the Bank of England (BoE) has stated that British financial authorities will take a “strong approach” to cryptocurrency and exchange platforms – particularly those big enough to bring about financial “market volatility.”
In an interview with CNBC, the BoE deputy chief Dave Ramsden stated that the influential Financial Policy Committee (FPC) last year ruled that cryptocurrency price “volatility” meant tokens could not be considered currencies in the same vein as national fiats.
Ramsden said that the FPC’s conclusions “still stand today,” and that authorities in the country remain very “vigilant about [cryptocurrencies].”
He also warned that a task force comprising the UK Treasury, the Financial Conduct Authority (FCA) and the BoE had ruled that the government needed to “take a strong approach” to “[cryptocurrencies] that might fall within the [UK’s] regulatory perimeter.” He added that authorities would “be mindful of [cryptocurrencies] and exchanges both inside and outside the regulatory perimeter.”
The BoE appears to believe that recent market trends back up its findings. Ramsden added, “[Cryptocurrencies] are too volatile to be a store of value, and we’ve seen that through their subsequent movement throughout last year” – a reference to the long crypto-winter of 2018.
He also stated,
“As a medium of exchange, the costs of [cryptocurrency] transactions are very expensive, so they don’t satisfy the basic principles of being a currency – which is why [British financial authorities] call them ‘crypto-assets.’”
The FPC has previously concluded that due to the “small size” of the cryptocurrencies market, tokens “do not currently represent a risk to financial stability.”
However, the BoE does appear to be a little keener on blockchain technology, with Ramsden claiming that the UK is “looking at using distributed ledger technology (DLT) in the payments space.”
Earlier this week, the FCA announced that three British blockchain startups had been accepted into its new regulatory sandbox. The companies have proposed developing a blockchain-powered document verification platform, an ID authentication solution and an e-commerce payments system.
The FCA said it had chosen from a pool of 99 applicant companies. The three firms will now begin testing, although the FCA says it has set up strict “testing parameters” and will “build in appropriate consumer safeguards.”