The crypto-currency market is double the size of the sub-prime debt in the U.S. on the eve of the financial crisis and poses a threat unless urgently regulated, the Bank of England said.
Crypto assets are now worth $2.3 trillion, about 200% more than at the start of the year. While that’s still a small part of the $250 trillion global financial system, it’s about twice the size of the $1.2 trillion sub-prime real estate debt market in 2008.
“You don’t have to account for a large proportion of the financial sector to trigger financial stability problems,” BOE Deputy Governor Jon Cunliffe said in a speech on Wednesday.
“When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice.”
About 2.3 million adults in the U.K. alone hold crypto assets, a survey by the Financial Conduct Authority showed. Cunliffe said more people see those assets as an alternative to mainstream investments instead of a gamble, and about half intend to invest more.
The vast majority of crypto wallets are open for investment/ trading purposes. Buying one crypto to enable trading in others does not contribute to the proliferation of real-world applications. Volume based on that activity is largely irrelevant to the wider world. On the other hand, borrowing against crypto holdings, leveraging up on investments based off crypto holdings and securitising physical assets using cryptos do have real-world applications.Click HERE to subscribe to Fuller Treacy Money Back to top