LONDON — Cryptocurrencies aren’t yet big enough to pose a systemic risk to financial stability, Bank of England Deputy Governor Jon Cunliffe said Wednesday.
“The speculative boom in crypto is very noticeable but I don’t think it’s crossed the boundary into financial stability risk,” Cunliffe told CNBC’s Joumanna Bercetche in an exclusive interview.
Bitcoin and other digital currencies shot up in value at the start of the year, briefly becoming a $2.5 trillion market. Backers of bitcoin claimed it could offer an alternative store of value as savers struggle to find yield due to ultra-low interest rates.
However, cryptocurrencies are highly volatile, and the market has lost more than $1 trillion in value since May. Bitcoin has fallen from a record high of nearly $65,000 reached in April to around $32,500 as of Wednesday.
Regulators have increasingly been sounding the alarm about crypto. China in particular has sought to crack down on the industry, in a series of measures that have weighed on investor sentiment in recent weeks.
Meanwhile, Binance, the world’s largest crypto exchange, was banned from operating in the U.K. by the Financial Conduct Authority last month. Binance was one of many exchanges that failed to register with the regulator due to not meeting anti-money laundering requirements.
Cunliffe said crypto speculation was mainly limited to retail investors for now, reiterating the central bank’s position that people investing in digital assets should be prepared to lose all their money.
“There are issues of investor protection here.