Bank of England warns on cryptos – again
The Bank of England has again fired fresh concern at cryptocurrencies. In a letter to banks and insurance companies deputy governor Sam Woods raised more institutional anxiety about volatility and market integrity.
“In their short history, crypto-assets have exhibited high price volatility and relative illiquidity,” Woods said in his letter, dated today, 28 June. “Entering into activity related to crypto-assets may give also rise to reputational risks.”
Crypto-assets, Woods added, “should not be considered as currency for prudential purposes”.
Lack of cohesion
However much of the global banking community remain compromised over a lack of regulatory direction not to mention consistency and perception: previously the Bank of England’s Policy Committee indicated back in December that cryptos did not represent a serious threat to the UK’s financial stability.
“At present, we don’t view [bitcoin] as a financial stability issue,” Bank of England governor Mark Carney told parliament in December, Reuters reported at the time.
Meanwhile many financial advisers, for instance, are reticent on whether client cash should be deployed towards the emerging asset class. Education issues – or their lack – on Bitcoin and other cryptocurrencies remain.
Adviser education upgrade
But there is a growing tranche of financial insiders who say that advisers who don’t take steps to understand cryptos are failing in their duty to clients.
Senior partner at Snowden Lane Partners in New York, Jesse Clinton, told the FT today that while he advises clients against investing in cryptocurrencies, Clinton himself holds Bitcoin and mines the asset at home.
“I set up a bitcoin server so I could educate myself on cryptocurrencies and be the guinea pig, so my clients don’t have to be,” Clinton told the UK’s leading business publication.
“It is our job to understand these instruments and advise our clients on their suitability, regardless of whether we execute the transaction or not.”