Bank of England crypto opinion: Earlier this year financial and political institutions in the United Kingdom decided to respond to claims that the crypto industry has risks attached to it. This would not be the first time the UK spoke on this topic.
On Thursday, June 28th, the Bank of England was the latest institution in the country to address crypto risks.
Bank of England Crypto Opinion: Risk Warning
In March of this year, the UK Central Bank discussed the topic of cryptocurrencies at a conference in Edinburgh, Scotland. The gist of the conversation was that virtual currencies are susceptible to illegal activity, such as money laundering.
Fast forward roughly three months, and the Bank of England is now saying something similar.
Sam Woods, the head of the Bank of England’s Prudential Regulation Authority, wrote to various company bosses Thursday. Why? Well, Woods warned these chief executives of various crypto risks and reminded them to wade carefully into the crypto water when investing.
Is There Truth in Sam Woods’ Words?
The Bank of England is on the right track. While it’s true that companies have taken stakes in these assets despite the risks, the more reminded we are of how susceptible cryptocurrencies can be to illegal activity, the more precautious we will be. At least, that’s the hope.
Even Japan is on the same page. Yesterday, Japan rolled out a new regulation, one that is supposed to help crack down on crypto money laundering.
Not every country is willing to do this, though. Some believe the benefits of the crypto industry outweigh the negatives. Is that true, though?
Warning: Danger!
In the written note to company bosses, the head of the Bank of England’s PRA reminded these executives – primarily those who work in banks, investment firms, and insurance companies – that there are certain PRA rules when it comes to “exposure to crypto-assets.”
He warned of two crypto risks, in particular:
1) Crypto assets fluctuate a lot in price, making them hard to sell.
2) Crypto assets are vulnerable to the following: crypto money laundering, fraud, manipulation, and terrorist financing risks.
And if that wasn’t a kick in the butt that some people may have needed to see crypto in a different light, Sam Woods wrote that entering into the crypto market may cause “reputational risks.”
The Takeaway
Do you agree that there are a number of crypto risks? Or, do you think it’s how people go about the industry that makes it risky? For instance, launching coins that weren’t ready to go live, which then causes trouble across the board?
Let us know in the comments below whether or not you believe in the Bank of England crypto opinion!
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