BoE governor calls for better regulation of crypto sector

BoE governor calls for better regulation of crypto sector

BoE governor calls for better regulation of crypto sector

Authorities in both the USA and European Union have instituted plans to apply anti-money laundering standards and anti-terrorism financing standards to cryptocurrencies in the same way that they do to other financial services products and it now looks like their counterparts in the United Kingdom are to follow suit.

However, the Governor insisted that, in his view, crypto-assets do not "appear to pose material risks to financial stability".

Carney added the Financial Stability Board (FSB) is set to report to the G20 in Argentina later in March on the financial stability implications of crypto-assets, potentially laying the groundwork for an global approach to its regulation. At the time of writing Bitcoin is valued at $10,875. For instance, one of the things he said was that: "authorities need to decide whether to isolate, regulate or integrate crypto-assets and their associated activities", which has been demonstrably put into action recently by the US Securities and Exchange Commission as dozens of subpoenas have been sent out to companies involved in the cryptocurrency craze.

But he warned this might change unless action is taken.

In February the Treasury Committee launched an inquiry into the role of digital currencies in the United Kingdom with the view to regulating the emerging asset class.

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"The technologies underlying crypto-assets, particularly distributed ledger, can: increase the efficiency of managing data; improve resilience by eliminating central points of failure, as multiple parties will share replicated data and functionality; enhance transparency (and auditability) through the creation of instant, permanent and immutable records of transactions; and expand the use of straight-through processes, including with "smart contracts" that on receipt of new information, automatically update and if appropriate, pay", Carney said. "The short answer is they are failing", Carney said in a speech. But they needed to be regulated in a similar way to other parts of the financial system, and could not replace traditional currencies.

"And just prior to the global financial crisis, the notional value of credit derivative swaps was 100%". These set of standards will bring crypto-assets into the financial mainstream. However, such risks may grow as retail adoption of bitcoin expands and traditional institutions lag behind on improvements to their systems.

In his speech, he lauded the potential value of the underlying technology of Bitcoin, but said the digital currencies themselves have failed as a form of money and rejected the prospect of a central bank digital currency in the near future.

His warning comes amid growing efforts around the world to bring bitcoin under the control of central banks and governments, amid fears of consumers losing money at the hands of market manipulation. They now operate in murky legal territory and previous year led SEC Chairman Jay Clayton to warn investors that "tales of fortunes" spun by companies may not always be true.

However, he added that if more people were to start investing, problems may arise.

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