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Bank of England keeps powder dry on crypto 'pockets of exuberance'

The last two months the fever of Bitcoin has been going down. As it was not enough bitcoin being taxed in Sweden as capital income, the Swedish crypto investors who hold assets in online wallets like CEX.io and make their most trades in Binance/CEX might have their life a bit more complicated.

Bank of England keeps powder dry on crypto 'pockets of exuberance'foto: Aleksi Räisä
Matilda Andersson
created at: Tue Jul 13 2021| updated at:Fri Sep 24 2021
27
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The last two months the fever of Bitcoin has been going down. As it was not enough bitcoin being taxed in Sweden as capital income, the Swedish crypto investors who hold assets in online wallets like CEX.io and make their most trades in Binance/CEX might have their life a bit more complicated. Highly-speculative cryptoassets like bitcoin are becoming more interlinked with big investors, but they don't pose a threat that requires action beyond monitoring for now, the Bank of England (BoE) said on Tuesday.

Price volatility in certain cryptoassets could highlight "potential pockets of exuberance", the BoE said in its twice-yearly Financial Stability Report (FSR). Cryptoassets are still largely held by retail investors, with more systemically important institutional investors having limited exposure at present, it added.

BoE Governor Andrew Bailey repeated his warning that investors should be very clear they can lose all their money given that cryptoassets have "no intrinsic value". There are signs of growing interest in cryptoassets and related services from institutional investors, banks, and key payment system operators, which could increase the interlinkages between cryptoassets and other systemic financial markets and institutions, the FSR said.

"From an institutional point of view, the evidence does not point to it being a large part of the picture, but we clearly have to watch it very carefully, as we do, because it is a fast changing landscape," Bailey said. "Highly speculative" cryptoassets were being watched quite carefully to see if action is needed to protect retail investors, BoE Deputy Governor Jon Cunliffe said. "From a financial stability point of view, the point at which you act is the point where you think, well actually you have a risk that is beginning to crystalise," Cunliffe said, adding that such a moment had not been reached.

Source

Reuters - UK.

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