"Nothing to see here" is the message coming out of the UK on regulation for Bitcoin. Mark Carney from the Bank of England has repeated that today in a press conference.
Bitcoin's rapid rise in value, particularly over the last month or so, has called into question whether it should be regulated. Similar questions came up when Bitcoin first hit the mainstream (2013 or so) and the message is pretty consistent and can be broken down into two key points:
- Bitcoin is not currently sufficiently widely-used to be considered a risk to financial stability.
- If you invest in Bitcoin (or other cryptocurrencies), you might lose all your money (see, for example, Andrew Bailey of the UK FCA's warning).
This is no different to the messages given by the Bank of England in 2014 (see the paper on the economics of digital currencies) and the EBA 2014 opinion on the risks (and the ECB's 2015 paper confirming that Bitcoin wasn't e-money).
Note - the French finance ministry has reportedly said that they want a discussion of bitcoin at the next G20 meeting as they consider that a legal framework for Bitcoin is necessary. As we've been saying since 2013, watch this space...
Carney says at present we do not view Bitcoin as a financial stability issue. It is not connected closely to the mainstream financial system. It’s more like an equity type risk. Carney expects international regulators will discuss crypto-currencies and potential future role of central bank digital currencies. He does not expect Bitcoin regulation to come under the Bank’s remit. He says the core financial system needs currencies that don’t take days to settle [as Bitcoin does].