Bank of England Governor Andrew Bailey has said that cryptocurrencies in their current form will not last but digital innovation in payments is “here to stay”.
Speaking on a panel about digital currencies at the World Economic Forum’s online Davos Agenda, Bailey (pictured) said that cryptocurrencies will not last as technology develops.
This is because cryptocurrencies do not have the right structure to work as a long-term payments method, he explained.
Bailey recognised that there has been innovation in payments but believes that cryptocurrencies as they are will not remain as regulators, consumers and businesses will search for stable, safe, well-designed digital currencies.
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“Are cryptocurrencies here to stay?” Bailey said.
“Digital innovation in payments, yes.
“Have we landed on what I would call the design, governance and arrangements for a lasting digital currency? No, I don’t think we’re there yet.”
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This follows the launch of the Treasury’s Cryptoasset and Stablecoin consultation last month, as part of the government’s broader regulatory approach to cryptoassets.
Lee Birkett, chief executive of peer-to-peer lending platform JustUs, said that the consultation has the potential to boost the growth of crypto-backed P2P lending.
In January this year, the City regulator warned consumers of the “very high risks” involved with some cryptoasset investments.
The Financial Conduct Authority said it was aware of some cryptoasset firms offering investments or lending linked to the digital currencies, and said this generally involves taking very high risks with investors’ money.