A top manager of the Bank of England spoke about the risks associated with cryptocurrencies and noted the advantages of blockchain technology, on which digital assets operate.

From 1 November 2023, Sarah Breeden will replace Jon Cunliffe as Deputy Governor of the Bank of England. At a hearing at the UK Treasury Committee, Breeden outlined her vision for regulating the crypto industry.

Breeden said that cryptocurrencies do not currently pose a big risk to the country’s financial stability. But they can become dangerous if they become closely associated with the financial world, for example if stablecoins are used for payments. Breeden did not agree with the position of the parliamentary committee, which proposed equating cryptocurrencies to gambling – instead, the official proposed regulating them on the same basis as traditional finance.

“Cryptocurrencies are an asset that has no intrinsic value. Its price could drop to zero, so investors should be prepared to lose all their money. However, blockchain technology can be beneficial to the financial system,” Breeden said.

According to the official, recent events have proven the risks of the cryptocurrency sector. As a result of the fall of the crypto market, two large American banks suffered from bankruptcy: Silvergate and Signature. There was also a collapse of the UST stablecoin and the collapse of several crypto lenders. Given the international nature of the crypto market, it is important for regulators to work together to develop comprehensive measures to oversee crypto assets, Breeden noted.

The official advocated the creation of a digital pound, which, in her opinion, “will become an anchor for all money in the digital world.” However, user privacy needs to be addressed first. Previously, a survey was conducted in the UK about the introduction of a digital pound, and 73% of citizens were against it due to the risks of violating privacy. In August, the Bank of England announced the creation of a task force to develop a digital pound.