- The governor-appointed to the Bank of England is issuing a warning to all Bitcoin investors.
- BoE Governor’s statements are a sign that the institution may be preparing tough measures against cryptocurrencies.
The governor-appointed to the Bank of England, Andrew Bailey, came up with critical statements for Bitcoin investors. In a speech before the UK parliament, Bailey warned:
If you want to buy Bitcoin, be prepared to lose all your money.
Bailey was deputy governor of the Bank of England for three years. On February 26, 2020, he was appointed by the UK Parliament to serve as Governor. Bailey has been critical of cryptocurrencies and Bitcoin and his statements are a sign that the institution may be hardening its stance on this type of assets.
In his speech, Bailey also stated that Bitcoin has no real value. He even stated that Bitcoin does not qualify as a currency, but as a commodity with high volatility. He added that investing in Bitcoin is like making a gamble:
There’s no guarantee of the value of Bitcoin (…). If you want to buy it, fine, but understand what you’ve got. It has no intrinsic value. It may have extrinsic value but it has no intrinsic value. That’s one point. It hasn’t caught on.
The governor-appointee does not recognize that Bitcoin has been declared one of the best assets of the decade and that its performance has exceeded, in terms of profit, one of the most important stock market indexes in the U.S., the S&P 500. His appointment is followed by a speech by Jon Cunliffe at the London School of Economics. Cunliffe is Deputy Governor for Financial Stability at the Bank of England and a member of the Monetary Policy Committee. In his speech, Cunliffe equates cryptocurrencies with 18th century banking systems.
In contrast, the financial institution’s representative finds value in stablecoins such as Facebook’s Libra. Cunliffe said that with its 2.5 billion users, if Libra will be approved, it could become a very important asset in a short period of time. He added:
Stablecoin developers have claimed a number of benefits that such schemes could bring, including very large reductions in the costs of payments, especially cross border (due in part to the much shorter chains of payment actions and smaller number of actors), greater financial inclusion through easier and cheaper access to payment services for the ‘unbanked’, and better functionality.
Hardening of regulations towards Bitcoin
Although there are still a few days to go before the governor’s new term begins, his statements denote an intention to tighten regulations against Bitcoin and cryptocurrencies. The British financial institution could follow in the footsteps of other international financial institutions, such as the European Central Bank and the U.S. Treasury Department.
The head of the latter financial institution, Steve Mnuchin, held a meeting with experts and important leaders of the blockchain industry. However, Mnuchin, like Bailey, is highly critical of Bitcoin and other cryptocurrencies. The Secretary of the Treasury has expressed concern about how cryptocurrencies are being used to finance illegal activities and for maintaining the integrity of the states’ financial system. It remains to be seen what action the Bank of England will take when the newly appointed governor takes office.