The Bank of England believes that the growth of cryptocurrencies threatens the financial system. Cunliffe said they should be ready for when Bitcoin becomes a bigger problem.
The Deputy Governor of the Central Bank of England, Sir Jon Cunliffe, revealed new warnings to investors of bitcoin and other cryptocurrencies. This Tuesday, December 14, the official declared that these assets could lose their value. The statement took effect during a BBC program.
Cunliffe said bitcoin price could vary considerably and, theoretically or practically, could drop to zero. He made these statements coinciding with the Stability Report published by the Bank of England on Monday, December 13.
In addition, the representative noted that the rapid growth of cryptocurrencies could put the British financial system at risk, as a drastic fall would generate a domino effect.
Cunliffe said the point where users worry is when they integrate into the financial system. A price correction could affect other markets and affect established players in the financial market. He added that the risk is not here yet, but it takes time to design standards and regulations.
In his opinion, the Bank of England must be prepared, with a regulatory framework that allows containing risks, for the moment when bitcoin becomes a much bigger problem. Cunliffe thinks that risk is close, so he urged regulators and legislators to consider this subject.
Along the same lines, the Bank of England pointed out in the Stability Report for December 2021 that 95% of cryptocurrencies, including bitcoin, are not backed by underlying assets and have no intrinsic value. This reason led these assets to be vulnerable to more expanded price corrections and, therefore, investors can lose their entire investment.
According to the Deputy Governor of the Bank of England, at least 2.3 million people in the UK hold cryptocurrencies, with an average investment per person of around £ 300 (about $ 400).
Declaring the Death of Bitcoin is a Usual Narrative
It is not the first time a senior Bank of England official has said that Bitcoin has no future. In January this year, the governor of the British issuing body, Andrew Bailey, said in an online forum that no cryptocurrency design could last over time.
Bailey clarified that the volatility of the price of Bitcoin would prevent it from maintaining itself over time since payments require a stable currency.
However, the Bank of England discussed the loss of bitcoin with analysts since 2010. By 2018, the first cryptocurrency got declared “dead” more than 300 times. According to 99Bitcoin, a project that aims at tracking public statements that bitcoin “will drop to zero,” this bitcoin figure could stand at least 436 times.
By: Jenson Nuñez
