Price volatility in certain cryptoassets could
highlight "potential pockets of exuberance", the BoE said in its
twice-yearly Financial Stability Report (FSR).
Cryptoassets are still largely held by retail investors, with
more systemically important institutional investors having
limited exposure at present, it added.
BoE Governor Andrew Bailey repeated his warning that investors
should be very clear they can lose all their money given that
cryptoassets have "no intrinsic value".
There are signs of growing interest in cryptoassets and related
services from institutional investors, banks, and key payment
system operators, which could increase the interlinkages between
cryptoassets and other systemic financial markets and
institutions, the FSR said.
"From an institutional point of view, the evidence does not
point to it being a large part of the picture, but we clearly
have to watch it very carefully, as we do, because it is a fast
changing landscape," Bailey said.
"Highly speculative" cryptoassets were being watched quite
carefully to see if action is needed to protect retail
investors, BoE Deputy Governor Jon Cunliffe said.
"From a financial stability point of view, the point at which
you act is the point where you think, well actually you have a
risk that is beginning to crystalise," Cunliffe said, adding
that such a moment had not been reached.
Last month Britain's Financial Conduct Authority said Binance,
one of the world's largest cryptocurrency exchanges, cannot
conduct any regulated activity in Britain.
(Reporting by Huw Jones; Editing by Mark Potter)
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