Reports are emerging stating that the Bank of England are calling for a clampdown on cryptocurrency use in the UK, following Mexico’s recent moves towards regulation in recent days.
Perhaps inspired by his Mexican counterparts, Governor Mark Carney has been heard discussing a ‘bubble’ effect within the digital coin markets. According to RT, Carney said:
“Cryptocurrencies act as money, at best, only for some people and to a limited extent, and even then, only in parallel with the traditional currencies of the users. The short answer is they are failing.”
In economics, a bubble occurs when the price of a product exceeds its intrinsic value, so what Carney is saying here is that cryptocurrencies will soon become far more expensive than they are worth, making them redundant. I remain sceptical about this, if Carney seems to think cryptocurrencies will naturally die out, then why do the Bank of England sound like they are starting to worry about them?
Interestingly, Carney then went on to discuss the risks associated with having digital assets and suggested that such assets could encourage involvement in terrorism, money laundering and tax evasion.
Whilst Carney didn’t explicitly discuss any regulation measures, his tone does seem to suggest that the Bank of England will be looking to other countries like Mexico who are successfully passing bills to regulate the cryptocurrency markets.
It’s pretty clear why the Bank of England would worry about the rise of cryptocurrency, not only could it put them out of the job, ultimately, money is a control mechanism, if people start making their own instead, then governments can, and will lose control of what is going on, this is something they tend to be in favour of avoiding.
Above all, Carney and the Bank of England are simply another addition to the growing list of crypto-sceptics, what they are truly worried about does remain un-clear but I believe that, following regulatory success in Mexico, the UK might not be far behind them.
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