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Bitcoin 'could cause the next financial crash'

Published Oct 15, 2021


Bitcoin and other cryptocurrencies could cause the next financial crash, according to a top Bank of England official, Britain’s Daily Mail reports.

Deputy Governor Sir Jon Cunliffe said a massive collapse in the price of cryptocurrencies to as low as zero is “certainly a plausible scenario” and that there was “a possibility of contagion” across the global financial sector.

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According to the report, Cunliffe said the hit to individual investors if cryptocurrencies collapse would be unlikely to cause a “financial stability risk”. But he added: “The picture is less clear for financial institutions.”

He compared a possible crypto crash with other financial meltdowns, and highlighted that the crypto market is now worth £1.7 trillion (R34 trillion), larger than the subprime mortgage market in 2008 when it collapsed.

“As the financial crisis showed us, you don't have to account for a large proportion of the financial sector to trigger financial stability problems,” Cunliffe said.

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He said regulation of cryptocurrency “needs to be pursued as a matter of urgency”.

“When something in the financial system is growing very fast, in a largely unregulated space, financial stability authorities have to take notice.”

The value of the cryptocurrency market has increased by 200% this year.

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