According to Cunliffe, the cryptocurrency market has grown from $ 16 billion to $ 2.3 trillion in five years and has doubled the volume of loans that caused the 2008 crisis. This is a reason to think about the systemic risks of the crypto market for the global financial system.
According to the deputy head of the Bank of England, 95% of cryptocurrencies, including bitcoin, are not backed by assets, writes bit.media.
The collapse of the entire crypto market is a very likely scenario for the development of events. Therefore, regulators must urgently develop rules to regulate digital assets, Cunliffe said.
“The lack of the intrinsic value of cryptocurrencies, their excessive volatility, possible vulnerabilities and“ herd behavior ”of people - all this suggests that the probability of a collapse of the cryptocurrency market is really high,” he explained.
The Bank of England Deputy Governor believes the link between cryptocurrencies and the traditional financial system is growing stronger as large companies, hedge funds and banks get involved in the cryptocurrency industry.
Cunliffe also talked about Decentralized Finance (DeFi). He believes that this unregulated sector poses huge risks to users, as investors are not guaranteed protection when receiving financial services from DeFi projects.
Last week, the Bank for International Settlements (BIS) published preliminary guidance requiring payments in stablecoins to comply with international payment, clearing and settlement standards.
The International Monetary Fund (IMF) released a report this week claiming that cryptocurrencies undermine the stability of the banking sector of states, especially when such instruments are recognized as legal tender, writes Coinpot. The IMF calls on states not to follow the path of El Salvador, which legalized BTC, and not to create dangerous situations for their economies.
Larry Fink, the head of the world's largest investment company BlackRock, agreed that bitcoin may not have value. At the same time, he recognized the great potential of digital currencies, but noted that it should not necessarily be about bitcoins, but, for example, about a digital dollar.
Bitcoin ETF approval could be delayed until 2022, ttrcoin writes. The SEC is currently reviewing over 20 applications for launching cryptocurrency ETFs.
Pantera Capital CEO Dan Morehead drew an analogy between the fall in Bitcoin in 2017 and 2021 after CME futures began trading and Coinbase's listing on the stock exchange. In his opinion, the next date for the fall of BTC will be the day when the first Bitcoin ETF will start trading in the United States, ”said Gravity Plus analysts.