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    Bank of England Calls for Regulation of Bitcoin and Other Cryptocurrencies

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    The value of all major cryptocurrencies, including Bitcoin, plummeted in late 2017 and early 2018, largely due to tougher regulation internationally, and outright bans from China and other nations who view them as a threat to their financial systems.

    During a speech at the inaugural Scottish Economics Conference on March 2, 2018 Governor of the Bank of England Mark Carney warned of the financial risks of purchasing and owning cryptocurrencies, and discussed how they are becoming an increasingly large threat to financial stability in the UK. 

    He also said cryptocurrencies should be regulated to protect the UK's financial system, while also calling on authorities and law enforcement agencies to tackle the use of digital currencies in crime, such as "money laundering and terrorist financing."

    "There are a number of problems with cryptocurrencies. They are small now but they are getting bigger. We will talk about them at the G20 meeting and we are talking about them now in the Bank of England. The Financial Policy Committee is looking at the risks to financial stability," Governor of the UK's central bank Mark Carney said.

    Bank of England governor Mark Carney leaves Number 10 Downing Street in central London, Britain October 31, 2016
    © REUTERS / Stefan Wermuth
    Bank of England governor Mark Carney leaves Number 10 Downing Street in central London, Britain October 31, 2016

    Mr. Carney said that an outright ban was unlikely, and insisted that regulation is needed to tackle the "speculative mania" associated with cryptocurrencies, with many unexperienced investors purchasing them in search of large financial gains.

    "A better path [instead of banning them] would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system. The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system," Governor Carney advised.

    On this occasion, Bitcoin's price has not nosedived in response to the announcement of regulation in yet another country.

    Although he was very critical of cryptocurrencies, he described the blockchain technology they use as "exciting and interesting." Other governments and central banks — including those which have heavily regulated or even banned cryptocurrencies — also look upon the blockchain technology favorably, as it has many innovative applications outside the digital currency world.

    Bitcoin has somewhat recovered in recent weeks, it could be set to fall again, as other countries look to regulate digital currencies.

    Related:

    US Commission Issues Subpoenas to Firms Linked to Cryptocurrencies - Reports
    Calls to Regulate Cryptocurrencies 'Could Cause Panic' Among Investors - Analyst
    Period of Growing Up: Bitcoin in Transition – Internet Ombudsman
    Tags:
    cryptocurrencies, financial system, regulation, Bitcoin, Bank of England, Mark Carney, United Kingdom
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