The Bank of England governor said Friday the “time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.”
Carney, who is also head of the Financial Stability Board, joins a growing chorus calling for greater oversight of the technology after the explosion of new cryptocurrencies created more than $438 billion in paper wealth since March 2, 2017, according to research site CryptoMarketCap.com. His comments also follow a rollercoaster ride for , which lost half its value at the start of the year after surging to a record near $20,000 in December.
Carney noted that “extreme volatility,” and said it reflected a a lack of any intrinsic value or external backing. He calculated that the average volatility of the top 10 virtual coins by market capitalization was more than 25 times that of the U.S. equities market in 2017.
In his speech, he lauded the potential value of the underlying technology of Bitcoin, but said the digital currencies themselves have failed as a form of money and rejected the prospect of a central bank digital currency in the near future.
“A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system,” he said. “Being part of the financial system brings enormous privileges, but with them great responsibilities.”
Carney endorsed the push by the U.S. Securities and Exchange Commission to classify cryptocurrencies as securities subject to laws governing how they are issued and traded. The SEC, concerned that so-called initial coin offerings are fraught with fraud, has taken a hard line on cryptocurrency providers. In recent weeks, the agency sent subpoenas to dozens of ICOs for information related to their businesses…