The governor of the Bank of England has called for cryptocurrencies to be regulated to “combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system.”
In a speech to the Scottish Economics Forum on Thursday, Mark Carney challenged the notion that digital currencies qualify as money, saying they are not widely accepted and are too unstable and inefficient.
But while he added that they could pose a risk to financial stability in the future, he did not call for a ban: “A better path would be to regulate elements of the crypto-asset ecosystem. […] The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”
Carney went on to acknowledge the value of the blockchain technology that underpins many cryptocurrencies: “Crypto-assets help point the way to the future of money […] through the possibilities their underlying technologies offer to transform the efficiency, reliability and flexibility of payments.”
His intervention comes after the Treasury Committee announced last week that it would investigate the role of cryptocurrencies in the UK, and how they affect consumers, businesses and government.
The cross-party group of MPs said it would scrutinise the regulatory response of the government, FCA and Bank of England, and assess “how regulation could be balanced to provide adequate protection […] without stifling innovation”.
Nicky Morgan, the chair of the committee, warned that while people are becoming increasingly aware of cryptocurrencies, “they may not be aware that they are currently unregulated in the UK, and that there is no protection for individual investors”.