LONDON, Oct 13 (Reuters) – A collapse in cryptocurrencies is a “plausible scenario” and rules are needed to regulate the fast-growing sector as a “matter of urgency”, Bank of England Deputy Governor Jon Cunliffe said on Wednesday.
Risks to financial stability from the application of crypto technologies are currently limited, but there are a number of “very good reasons” to think that this might not be the case for very much longer, Cunliffe said.
“Regulators internationally and in many jurisdictions have begun the work. It needs to be pursued as a matter of urgency,” Cunliffe said in a speech to the SIBOS conference.
Largely unregulated cryptoassets have grown by 200% so far this year, from just under $800 billion to $2.3 trillion, with 95% of them, including bitcoin, unbacked by any asset or fiat currency, Cunliffe said.
“But as the financial crisis showed us, you don’t have to account for a large proportion of the financial sector to trigger financial stability problems – sub-prime was valued at around $1.2 trillion in 2008,” Cunliffe said, referring to a corner of the U.S. mortgage market whose collapse led to a global