Crypto could cause 2008-level meltdown, Bank of England official warns
The Bank of England’s deputy governor for financial stability, Jon Cunliffe, has warned that cryptocurrencies could spark a global financial crisis unless tough regulations are introduced.
In a speech Wednesday, Cunliffe likened the rate of growth of the cryptoasset market, from $16 billion five years ago to $2.3 trillion today, to the $1.2 trillion subprime mortgage market in 2008.
However, he contended that although financial stability risks remain limited for now, the current applications of cryptoassets pose a financial stability concern since the majority “have no intrinsic value and are vulnerable to major price corrections.”
Bitcoin and ethereum, the two largest cryptocurrencies, plunged more than 30% in value earlier this year before recovering, and have proven extremely volatile since their creation. Prices are susceptible to a variety of external triggers, from comments by Tesla CEO Elon Musk to regulatory crackdowns by the Chinese government.
Reference: CNBC
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