Bank of England (BOE) Governor Andrew Bailey expressed his concerns about Bitcoin’s inability to gain traction as a viable payment method, citing inefficiencies in its functionality, in a session before the United Kingdom Parliament Treasury Committee on January 10.
Bitcoin’s Struggle As A Payment Method
Accompanied by BOE Deputy Governor Sarah Breeden, Bailey addressed the committee to discuss the latest Financial Stability Report released by the Bank of England. According to a report by Bloomberg, Bailey stated that the integration of cryptocurrencies into the global financial system has encountered significant hurdles, with digital coins struggling to garner support from regulators and the general public.
During the committee hearing, Bailey remarked:
My own sense is that it’s not taking off as what I might call a core financial service. For instance, using Bitcoin as a payments method is pretty inefficient.
The governor emphasized the need for regulators to closely monitor the cryptocurrency market, acknowledging that its integration into mainstream finance has failed to maintain momentum.
Despite an increasing number of Britons holding cryptocurrencies, these digital assets have faced challenges in breaking into the mainstream and remain a relatively small component of the global financial system. Bailey reiterated his longstanding opinion that unbacked coins lack intrinsic value.
The regulatory landscape surrounding cryptocurrencies has become a focal point in the UK, especially following the collapse of the FTX Group, a crypto exchange. Concerns have been raised about establishing stronger ties between traditional finance and the crypto market.
In response, UK regulators are advancing plans to regulate the industry. Additionally, the Bank of England is independently developing a digital pound to mitigate risks associated with the widespread adoption of crypto assets.
Bailey reflected on the past momentum in the cryptocurrency space, stating, “We had a bit of momentum a few years ago. It actually hasn’t kept up.” Sarah Breeden, the BOE’s deputy governor for financial stability, echoed Bailey’s sentiments during the same hearing, emphasizing that traditional finance’s limited involvement in crypto is due to the absence of a regulatory framework that enables safe participation.
Nevertheless, Breeden noted that regulators are taking steps in the cryptocurrency domain. However, the debate over its integration into the traditional financial system remains a central theme in regulatory discussions.
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