{"id":51158,"date":"2021-10-14T09:26:29","date_gmt":"2021-10-14T06:26:29","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=51158"},"modified":"2025-09-02T22:11:19","modified_gmt":"2025-09-02T19:11:19","slug":"bank-of-england-calls-bitcoin-collapse-a-plausible-scenario","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/bank-of-england-calls-bitcoin-collapse-a-plausible-scenario\/","title":{"rendered":"Bank of England calls Bitcoin collapse a plausible scenario"},"content":{"rendered":"

Bank of England has deemed a collapse of the cryptocurrency market a ‘plausible scenario’ and flagged the need for an ‘urgent’ development of a regulatory framework for digital assets. This was stated<\/a> by Deputy Governor John Cunliffe.<\/p>\n

The official described the risks emanating from cryptocurrencies as ‘limited’ for financial stability. At the same time, he noted their growing interconnectedness with the traditional sector.<\/p>\n

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“Regulators at international and national levels have begun work. This needs to be done urgently,”<\/em> \u2014 Cunliffe said.<\/p>\n<\/blockquote>\n

The cryptocurrency market in 2021 grew by 200%, to $2.3 trillion. 95% of cryptocurrencies, including Bitcoin, are not backed by fiat money or other assets, according to Cunliffe.<\/p>\n

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“The 2008 financial crisis triggered the subprime mortgage segment, which was valued at $1.2 trillion. The collapse of the cryptocurrency market is certainly a possible scenario, given the lack of intrinsic value, volatility, high asset correlation, cyber- and operational vulnerabilities, and, of course, the strength of herd behaviour,”<\/em> he enumerated.<\/p>\n<\/blockquote>\n

According to the BoE official, links between cryptocurrencies and the traditional financial system are growing as larger investors, hedge funds and banks become more involved in the space.<\/p>\n

The unregulated DeFi<\/a>-sector presents ‘obvious’ problems, given the lack of investor protections. The Bank of England has begun work to manage these risks, Cunliffe added.<\/p>\n

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“Effectively embedding cryptocurrencies within the regulatory perimeter will provide assurances that society will reap greater benefits from the use of this technology,”<\/em> he concluded.<\/p>\n<\/blockquote>\n

In October, Cunliffe, as head of the Payments and Market Infrastructure Committee of the Bank for International Settlements presented<\/a> a report setting out guidance on the alignment of stablecoin mechanisms with international standards for payments, clearing and settlement systems.<\/p>\n

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The Bank of England has deemed a collapse of the cryptocurrency market a ‘plausible scenario’ and flagged the need for an ‘urgent’ development of a regulatory framework for digital assets. This was stated by Deputy Governor John Cunliffe.<\/p>\n","protected":false},"author":1,"featured_media":51159,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[216,1269,36,810],"class_list":["post-51158","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-bank-of-england","tag-cryptocurrencies","tag-regulation","tag-united-kingdom"],"aioseo_notices":[],"amp_enabled":true,"views":"22","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/51158","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=51158"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/51158\/revisions"}],"predecessor-version":[{"id":51160,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/51158\/revisions\/51160"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/51159"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=51158"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=51158"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=51158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}