Crypto popularity could be a ‘warning sign’, Bank of England Governor says

Crypto popularity could be a ‘warning sign’, Bank of England Governor says
1 year ago
2 mins read

Bank of England governor Andrew Bailey has said the rising popularity of cryptocurrencies could be a warning sign as investors look for value in digital assets. 

Speaking before the BoE citizens panel event, Bailey criticized cryptocurrencies for lacking an intrinsic value despite providing an investment opportunity. 

His sentiments come after bitcoin plunged to below $50,000 in the wake of electric vehicle manufacturer Tesla suspending purchasing cars using the asset. 

“You’ve probably seen all the stories about the price of bitcoin, share prices in the U.S. suddenly rocketing up for companies that nobody quite knows what they do. That’s a warning sign. People are looking for investment opportunities. Buy it if you want, but it has no intrinsic value,” said Bailey. 

During the session, Bailey added that BoE is also exploring launching a Central Bank Digital Currency (CBDC). 

Towards the end of April, BoE had advertised job openings for a team dedicated to exploring CBDCs. The bank posted four analyst jobs with two architect roles and one senior management position related to CBDCs.

Furthermore, Deputy Governor Jon Cunliffe urged governments to explore digital currency. He noted that there is a risk of private companies playing a central role in controlling the money people use.

UK’s skepticism towards cryptocurrencies

Overall, the U.K. leading financial figures and entities have remained skeptical in regards to embracing digital assets.  For instance, the Financial Conduct Authority, the country’s financial markets regulator, stated that crypto investments carry risks:

“Investing in crypto assets, or investments and lending linked to them generally involves taking very high risks with investors’ money. If consumers invest in these types of products, they should be prepared to lose all their money,” FCA said in a statement.

Bailey, the former the chief executive of the FCA, in 2017 said bitcoin will collapse and warned the investors to ‘be ready to lose all your money’.

Featured image via Bloomberg Markets and Finance YouTube.

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Jordan Major