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Highlights
- Bank of England Deputy Governor Sir Jon Cunliffe has warned that the rate at which the market is exploding could create a financial meltdown unless the government steps forward with tougher regulations.
- The crypto assets have exploded by about 200% in just 2021, from under US $800 billion to US $2.3 trillion.
The cryptocurrency market in the United Kingdom has grown at an exponential rate. At present, England is one of the leading players in cryptocurrency adoption and operation in the region. It is one of the most active hubs of cryptocurrency activities in central, northern, and western Europe. While this could be one of the high points for the country, Bank of England Deputy Governor Sir Jon Cunliffe said that this could create a financial meltdown unless the government steps forward with tougher regulations.
The cryptocurrency assets have exploded by about 200% in just 2021, from under US $800 billion to US $2.3 trillion. Sounding the warning bugle, Cunliffe said that unless stringent measures are taken, countries worldwide could stare at a possible financial crisis similar to the one in 2008.
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This is not the first time that a BoE official has come out in open warning against cryptocurrencies. In fact, earlier this year, BoE Governor Andrew Bailey had warned the investors of the dangers of participating in crypto activities so vigorously. He had said that one should get into cryptocurrencies only if they are prepared to lose all their money.
Regulations and rules
The crypto regulators are active in the area, and the Boris Johnson government has taken many steps to protect investors. The UK Financial Conduct Authority has appointed the Anti-Money Laundering and Anti-terrorist Financing Regulator of crypto-asset firms earlier this year. The FCA has been vigilant and taken extreme steps in this regard, such as banning Binance, the world's leading cryptocurrency exchange in the world, from operating in the UK.
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The UK government is also warning people about the risks of investing in cryptocurrencies. The Her Majesty's Revenue and Customs (HMRC) has also made it mandatory for UK citizens to file taxes on cryptocurrencies. Experts feel that all financial institutions, regulators, and government agencies should be on the same page to ensure a smooth cryptocurrency operation within the country.
Central bank digital currency
Cunliffe has claimed that UK's Central Bank Digital Currency (CBDC) can meet the needs of modern day lives. Cunliffe is currently co-chairing a task force set up by the UK government to explore the rollout of a central bank digital currency.
Meanwhile, the financial leaders from the G7 countries endorsed the 13 public policy principles regarding the implementation of CBDC. In a meeting held in Washington, the G7 leaders, including Canada, France, Germany, Italy, Japan, the UK, and the US, all agreed that the CBDCs should harm the bank's ability to maintain financial stability.
