Listen to this Article Now
Sir Jon Cunliffe, deputy governor of the Bank of England in a speech stated that Cryptocurrencies need regulations as a “matter of urgency”. He opines that Crypto technologies do not pose a risk to financial stability at the moment, but there are “very good reasons” to think that this might not be the case for much longer.
In view of this, London-based Fintech investor and founder of Capital.com, Viktor Prokopenya, in a speech asserted that ‘Whilst regulation of cryptocurrencies is an interesting topic, perhaps the BoE should be focusing more on the severity of sustained quantitative easing in the absence of interest rate growth – which is a textbook formula for swelling long-term inflationary pressure on the national economy.’
Sir John believes that there is the possibility of contagion; a large fall in crypto valuations could affect investor risk sentiment more broadly, causing investors to sell other assets that are judged to be risky and those perceived to have a similar investor base.
Prokopenya, on the other hand, considers the notion of a widespread financial crisis attributable to crypto volatility. “This is unlikely to without a series of bankruptcies on an institutional scale. As of yet however, it is nigh impossible to take out a significant loan in a fiat currency in order to finance an extensive crypto purchase; banks would outright refuse to release funds for such a purpose.”
According to Sir John, “Bringing the crypto world effectively within the regulatory perimeter will help ensure that the potentially very large benefits of the application of this technology to finance can flourish in a sustainable way.” However, Prokopenya suggests that Government economists should focus on working with the industry to get the right Fintech regulation in place for the future.”