Bank of England Governor Andrew Bailey expressed concerns about the stagnation in the integration of cryptocurrencies into the global financial system.
Despite a growing number of Britons owning cryptocurrencies, these digital assets have struggled to penetrate the mainstream and make up only a small part of the global financial system.
At a recent meeting with the UK Parliament Treasury Committee, Bailey said:
“My feeling is that Bitcoin cannot be called a core financial service. For example, using Bitcoin as a payment method is highly inefficient.”
Emphasizing that regulators need to “monitor the market very closely”, Bailey pointed out that the momentum in the integration of the cryptocurrency market into mainstream finance cannot be sustained.
Bailey reiterated his long-held view that unbacked coins lack intrinsic value. This development comes as regulators in the UK are advancing plans to regulate the market, fueled by the collapse of the FTX crypto exchange and subsequent concerns about stronger ties to traditional finance.
The Bank of England is also independently developing a digital pound to reduce some of the risks associated with the widespread adoption of crypto assets. “We had some momentum a few years ago,” Bailey said. “The reality is that momentum hasn't continued.”
Sarah Breeden, Deputy Governor of the Bank of England for Financial Stability, echoed Bailey's views at the same meeting. He attributed traditional finance's limited involvement in crypto to the absence of a regulatory framework that ensures safe operations.
However, Breeden emphasized that regulators are taking steps in the cryptocurrency space, pointing to the UK's plans and the US Securities and Exchange Commission's pending decision on whether to approve exchange-traded funds for Bitcoin.
*This is not investment advice.
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Unpacked coins, what like every fiat currency including the pound!