Is the bursting of crypto's bubble a mixed blessing? The Bank of England's Deputy Governor says that, with proper regulation, the Bitcoin baby doesn't have to be thrown out with the bathwater
“Financial assets with no intrinsic value – that is to say with no real-economy assets backing them and no means of generating revenue – are only worth what the next buyer will pay,” Sir Jon said.
Sir Jon says he doesn’t know what the future holds for crypto assets “other than that they will continue to be volatile and that those that invest in them need to understand that the prices can collapse”. With these new technologies, all these things could be done at lower cost, greater speed and with transparency, provided firms and regulators can ensure appropriate risk management.The real question for regulators is not ‘What next for Bitcoin?’ but asking what is needed to ensure this innovation flourishes without “giving rise to increasing and potentially systemic risks”, he believes.
Technological differences may mean current rules aren’t fit for purpose. The august bodies who create and supervise the building of the world’s financial architecture are examining them now.
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