Bitcoin price LIVE: Cryptocurrencies might cause a $250 trillion crisis, according to the Bank of England.
Digital currencies like bitcoin might spark a financial meltdown unless the government takes action to enforce laws, according to a top Bank of England official.
“The financial crisis showed us that you don’t have to account for a huge amount of the financial sector to trigger financial stability problems,” deputy governor Sir Jon Cunliffe said in a speech yesterday. He believes that a price collapse of cryptocurrencies to zero is “definitely a conceivable scenario” that would result in “the prospect of contagion” across the global financial industry.
In a speech at Sibos, he compared the crypto disaster to earlier financial meltdowns, pointing out that sub-prime mortgages were worth approximately $1.2 trillion when they crashed in 2008, whereas the crypto market is currently worth £1.7 trillion.
Cryptoassets, which are largely unregulated, have increased by 200 percent this year, from just under $800 billion to $2.3 trillion. Cunliffe has called for crypto to be controlled as soon as possible.
While the financial sector is stronger now than it was in 2008, governments must be cautious about responding to financial advances.
According to data from coinmarketcap.com, the worldwide crypto market cap climbed by almost 4% to $2.38 trillion in the last day. It’s currently worth $57,000. Ethereum, the second-largest cryptocurrency, has also increased by almost 5%.
Coinbase, the New York-based cryptocurrency exchange, believes that increased regulatory scrutiny will improve trust in digital assets, according to City AM. Only through education and regulation will the promise of digital assets be realized.
“Cryptocurrency and the blockchain technology that underpins it have enormous potential to transform financial services and spur innovation.”
While the risks posed by cryptocurrency are “not yet systemic,” the IMF warned that countries that continue to utilize “inadequate operational and regulatory frameworks” to manage digital assets should “closely monitor” the situation.
They also recognized hacking as a threat to the crypto industry, as well as “lack of transparency around token issuance and distribution” and operational concerns like as downtime during periods of excessive volatility.
The IMF’s global financial stability report adds to the chorus of voices claiming that unregulated crypto marketplaces are a threat to financial stability. Bitcoin, on the other hand, has mostly ignored it. This market *cannot* be regulated, in my opinion pic.twitter.com/JWkLFITrwUA “Brinkwire Summary News” has all eyes on crypto.