Bank Of England governor Mark Carney reports to the G20 that there’s no immediate need for crypto-asset regulation…
It’s been a particularly turbulent few days in what’s already been a turbulent year for cryptocurrencies. Seemingly kickstarted by Google’s announcement last week that it was to ban crypto-related advertising, we’ve since seen Facebook and Twitter follow suit. Off the back of that, sizeable falls in the price of cryptocurrencies followed, although there’s been a little bit of bounceback over the weekend.
What may have helped is a letter from Mark Carney, the governor of the Bank Of England, in his role as chair of G20’s Financial Stability Board.
Carney, who gave a speech at the start of the month that was seen as dismissive of the potential of cryptocurrencies, wrote to his colleagues on the G20 committee following a review of the financial stability risks that were seen as being posed by the swift growth of crypto-assets.
“The FSB’s initial assessment is that crypto-assets do not pose risks to global financial stability at this time”, he concluded. He added a caveat, noting that “this is in part because they are small relative to the financial system. Even at their recent peak, their combined global market value was less than 1% of global GDP … Their small size, and the fact that they are not substitutes for currency and with very limited use for real economy and financial transactions, has meant the linkages to the rest of the financial system are limited”.
Carney nonetheless noted that the market is evolving fast, and doubled down on his view that crypto-assets are being used to shield “illicit activity”.
Still, Carney’s letter has been received fairly positively in crypto circles, certainly more so than his last intervention. Many had feared that the G20 was going to insist on far tighter government regulation. As it stands, whilst the issue of regulation remains a hugely salient one, the G20 is not taking it into its own hands as of yet.
Carney’s letter can be read here (PDF file).