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Susannah Streeter – a senior investment and markets analyst at Hargreaves Lansdown – said that regulators have spent years of “tip-toeing” around the currencies. Now the bank appears to be changing tact after deputy governor Sir Jon Cunliffe said today that crypto poses a rapidly growing threat to the global economy and should be regulated.
He said: “Regulators internationally and in many jurisdictions have begun the work.
“It needs to be pursued as a matter of urgency.”
Ms Streeter claimed that his comments were the “firmest indication” they will soon step in to prevent it blowing “up in the face of the financial sector”.
She said: “Regulators and central banks are walking a tricky tightrope, recognising the need to foster new decentralised payments technology but ensuring enough rules are in place to prevent runaway speculation infecting the wider financial sector.
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She explained that the FCA is “extremely worried about the collision between social media and the crypto world”.
This came after celebrity and influencer Kim Kardashian posted about a token earlier this year – widely considered to be the biggest financial promotion in history.
She added: “Now, this nervousness about how financially vulnerable younger investors are being targeted by influencers has widened to an anxiety that the crypto wild west could undermine the stability of the financial system.
“There has been a hesitancy until now to bring cryptocurrencies into the regulatory sphere because of the risk it will add more legitimacy to the currencies.
‘’Regulators have been tip-toeing round the crypto world, shouting out occasional warnings to the crowds of speculators, but we now have the firmest indication yet that they will soon be stepping in to break up the block party.
Breaking ranks with most of the world’s other central banks, Sir Jon said: “A massive collapse in cryptoasset prices, similar to what we have seen in tech stocks and sub-prime, is certainly a plausible scenario.
He went on to say that the “bulk of these assets have no intrinsic value and are vulnerable to major price corrections”.
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