The Bank of England has spoken out against bitcoin, promising they would crack down on the cryptocurrency to avoid future financial instability.
In a speech on Friday, the Bank’s governor Mark Carney warned against virtual currencies and said the time had come to clamp down on exchanges for money laundering and terrorism-financing.
“Authorities are rightly concerned that given their inefficiency and anonymity, one of the main reasons for their use is to shield illicit activities. This cannot be condoned. Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to,” he said addressing the Scottish Economics Conference in Edinburgh.
Cryptocurrencies are often associated with illicit activities including money laundering and drug dealing due to how it is impossible to trace the ownership of the currency.
“The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system,” said Carney.
“Being part of the financial system brings enormous privileges, but with them great responsibilities. In this spirit, the EU and the US are requiring crypto exchanges to meet the same anti-money laundering and counter the financing of terrorism standards as other financial institutions.
“In my view, holding crypto-asset exchanges to the same rigorous standards as those that trade securities would address a major underlap in the regulatory approach.”
It is not the first time officials have warned against bitcoin. In December, Andrew Bailey from the UK’s Financial Conduct Authority said that all those who have money invested in the virtual currency should be prepared to lose everything they had.
“If you look at what has happened this year, I would caution people. We know relatively little about what informs the price of Bitcoin,” said Bailey.
“It’s an odd commodity as well, as the supply is fixed. If you want to invest in Bitcoin be prepared to lose your money – that would be my serious warning.”