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28 June 2018

Financial Times: BoE warns banks and investors over cryptocurrency risks


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Cryptocurrencies are highly volatile, vulnerable to fraud and may give rise to “reputational risks” for businesses that get involved with the assets, the deputy governor of the Bank of England wrote in a “dear CEO” letter to banks, insurers and investors.


Sam Woods, the deputy governor for prudential regulation and chief executive of the Prudential Regulation Authority, wrote in a letter that “the range of products and market participants related to crypto-assets has grown quickly. In their short history, crypto-assets have exhibited high price volatility and relative illiquidity.”

“Crypto-assets also raise concerns related to misconduct and market integrity — many appear vulnerable to fraud and manipulation, as well as money-laundering and terrorist financing risks. Entering into activity related to crypto-assets may give also rise to reputational risks,” he wrote.

Mr Woods went on to remind businesses of their responsibilities to act in a prudent manner, have effective risk strategies and co-operate with regulators.

The letter went on to say that pay should not incentivise excessive risk-taking and that companies should “conduct extensive due diligence before taking on any crypto-exposure”.

Full article on Financial Times (subscription required)

Full letter



© Financial Times


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