A top manager from the Bank of England has expressed her views on the risks associated with cryptocurrencies and highlighted the advantages of blockchain technology, upon which digital assets are built. Starting from November 1, 2023, Sarah Breeden will replace Jon Cunliffe as the Deputy Governor of the Bank of England. During a hearing at the UK Treasury Committee, Breeden outlined her vision for regulating the crypto industry. She stated that currently, cryptocurrencies do not pose a significant risk to the financial stability of the country. However, they could become dangerous if closely intertwined with the financial world, for instance, through the use of stablecoins for payments. Breeden disagreed with the parliamentary committee’s proposal to classify cryptocurrencies as gambling and instead suggested regulating them on par with traditional finance.
“Cryptocurrencies are assets without intrinsic value. Their price can drop to zero, so investors must be prepared to lose all their money. However, blockchain technology can benefit the financial system,” said Breeden. According to her, recent events have demonstrated the risks of the cryptocurrency sector. As a result of the crypto market downturn, two major American banks, Silvergate and Signature, suffered bankruptcy. Additionally, there was a collapse in the stablecoin UST and the failure of several crypto lenders. Given the international nature of the crypto market, collaborative efforts among regulatory bodies are crucial for developing comprehensive measures for overseeing crypto assets, noted Breeden.
The official advocated for the creation of a digital pound, which she believes will “serve as an anchor for all money in the digital world.” However, the issue of user privacy needs to be addressed first. Earlier in the UK, a survey was conducted regarding introducing a digital pound, and 73% of citizens expressed opposition due to privacy concerns. In August, the Bank of England announced the formation of a dedicated group to develop the digital pound sterling.