Bank of England Boss Pledges ‘Tough Love’ in Cryptocurrency Regulation

Bank of England Governor Andrew Bailey says there will be an element of “tough love” in regulating cryptocurrency. “What we cannot have is a world where innovation gets a free pass to ignore the public interest. The odds of such an approach not ending well are too high,” the governor said.

Bank of England Governor Andrew Bailey talked about cryptocurrency regulation Monday at the annual conference of financial trade body The City UK.

He was quoted as saying: “We must, both domestically and working with international partners, ensure that we understand and respond to the public interest issues that arise here.” He said it will allow the Bank of England to protect financial stability while allowing innovation to happen “in a world where the public interest is well defined and protected.”

Emphasizing, “What we cannot have is a world where innovation gets a free pass to ignore the public interest. The odds of such an approach not ending well are too high,” the governor detailed:

There will inevitably be elements of tough love in such a process, and some disappointed ambitions, but I am confident that out of it will come a robust form of innovation.

Governor Bailey has long been a critic of cryptocurrencies. Last month, he said cryptocurrencies are “dangerous,” reiterating that they “have no intrinsic value” and “Buy them only if you’re prepared to lose all your money.”

He also talked about stablecoins, noting that they “have the potential to be systemic in terms of their importance for the financial system and its stability.” Bailey elaborated, “A key requirement will be to ensure that, unless the stablecoin is operating as a bank, the backing assets for stablecoins cover the outstanding coin issuance at all times.”

Moreover, the governor of the Bank of England warned against using cryptocurrencies for payments, stating:

They fluctuate in value substantially, which is why they’re on the whole not a good medium for making payments.

Addressing the Bank of England’s work on a central bank digital currency (CBDC), he said the bank and the U.K. Treasury are weighing the potential of creating one. “We’re going to engage with users, the technology sector, to understand the potential for these things,” he said.