The Bank of England deputy governor believes history shows survivors of the current cryptocurrency chaos could emerge as industry giants.
The Bank of England is keeping a stiff upper lip as it considers cryptocurrency.
It seems not everyone’s Googling ‘Bitcoin is dead’ … The Bank of England’s deputy governor Jon Cunliffe, for instance, said some pretty positive things about the crypto industry this week.
A major central banker talking up crypto during a time of hefty reputational damage to the industry with over-leveraged players potentially going under?
Cunliffe was speaking during the Point Zero Forum in Zurich midweek, as reported by both Bloomberg and Decrypt, and compared the current crypto market crash to the early days of the internet – an oft-referenced tale of boom, bust and phoenixes rising from ashes.
“The analogy for me is the dotcom boom when $5 trillion was wiped off values,” said the deputy guv.
“A lot of companies went, but the technology didn’t go away.”
Cunliffe added that “those that survived – the Amazons and the eBays – turned out to be the dominant players,” also noting that whatever happens to cryptocurrencies in coming months, he expects “crypto technology and finance to continue”.
And that’s because it has “the possibility of huge efficiencies and changes in market structure”.
The BoE on stablecoins
This line of thinking from the BoE is interesting to compare with its assessment on crypto around this time last year, when its governor Andrew Bailey said “the evidence does not point to it (crypto) being a large part of the picture”. Although he did acknowledge it was a fast-changing landscape.
And while we’re so used to hearing prominent central bankers throw shade on crypto (including Bailey) perhaps it shouldn’t come as a complete surprise that the Bank of England has at least begun to provide some decent balance in its discourse and assessment of the industry.
After all, it was only a couple of months ago that the British government outlined a detailed plan to make the nation “a hospitable place” for the digital-asset class and turn the UK into “a global cryptoasset technology hub”.
In his Point Zero Forum discussion, Cunliffe also revealed the Bank of England’s thoughts on stablecoins and central bank digital currencies (CBDCs).
The deputy governor said that the central bank was considering whether to create an independent CBDC with an “on or off ramp to fiat”, or “something that is flexible enough” to be used in private stablecoins.
“The question is, are you better off having private stablecoins to be more optimised in certain areas, which then link back to a central bank ledger in some way? Or should we provide the base?” pondered Cunliffe.
The British government and Bank of England have both indicated that the nation intends to bring stablecoins within the regulatory framework as soon as possible.
In fact, in April, the government’s Treasury announced that it is now validating stablecoins as an accepted form of payment.
For his part, though, Bailey has in the past indicated a preference for regulating stablecoins in the same manner as traditional fiat systems.
Meanwhile, earlier this month, the Bank of England also announced it would intervene to direct and oversee collapsing stablecoins in the event that an issuer “reached systemic scale fail”.
Hmm … can hardly blame the BoE on this one, but guess Terra’s UST didn’t make the rescue-program cut.