But a tautology does not a currency make.” As Bitcoiners themselves are fond of saying, ‘one Bitcoin = one Bitcoin’. Thomas Belsham, who works in the Bank’s stakeholder and media engagement division, wrote: “The problem is that, unlike traditional forms of money, Bitcoin isn’t used to price things other than itself. In a separate blogpost published on its website on Tuesday, a member of the Bank’s staff said bitcoin failed to fulfil many of the features required of a currency and that it risked being inherently volatile. “Enhanced regulatory and law enforcement frameworks, both domestically and at a global level, are needed to influence developments in these fast-growing markets in order to manage risks, encourage sustainable innovation and maintain broader trust and integrity in the financial system,” it said. Publishing its regular health check on the financial system, the Bank said major institutions should take a cautious approach to adopting crypto assets and that it would pay close attention to developments in the market. However, it warned that, at the current rapid pace of growth, such assets could become more interconnected with traditional financial services and were likely to pose a number of risks. The Bank’s financial policy committee, set up in the wake of the 2008 financial crisis to monitor risks, said on Monday there was little direct threat to the stability of the UK financial system from crypto assets. As many as 2.3 million people hold crypto assets, at an average amount of about £300 each. About 0.1% of UK households’ wealth is in bitcoin and similar crypto assets, such as ethereum and Binance coin. The market capitalisation of crypto assets has grown tenfold since early 2020 to about $2.6tn, representing about 1% of global financial assets. “Their price can vary quite considerably and could theoretically or practically drop to zero,” he told the BBC. The deputy governor, Sir Jon Cunliffe, said the Bank had to be ready for risks linked to the rise of the crypto asset following rapid growth in its popularity. The cryptocurrency peaked above $67,000 in early November, but suffered a sell-off after news first broke of the Omicron variant of coronavirus, before stabilising around its current level in the past week.
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