Bitcoin [BTC] and other cryptocurrencies fail basic financial tests, says Bank of England official

The cryptocurrency market’s volatility and traction have been far-reaching, so much so that even prominent members of established institutions are talking about it. Bitcoin [BTC], the largest cryptocurrency in the world, has captured the attention of several people, including that of Huw van Steenis, the Senior Adviser to Bank of England Governor – Mark Carney.

Speaking to Bloomberg at the ongoing Davos meet, Steenis spoke about the inception of Bitcoin, during the 2008 financial crisis. He stated that the magnitude of the market crash was dumbfounding and was the perfect opportunity for FinTech to rise.

Even Nouriel Roubini, an American economist popularly known as Dr.Doom, was mentioned in the discussion as someone who had called the crisis before it actually happened. Roubini has been a vocal critic of the cryptocurrency industry, even comparing Ethereum co-founder Vitalik Buterin to North Korea’s Kim Jong-un.

Steenis went on to say that the major banking institutions was leading a review of future finance with a lot time being spent on the propagation of the payment and financial system. He stated that globally, banks spend only 25 percent of the total budget for digital transactions. He then focused his discussion on cryptocurrencies such as Bitcoin and explicitly said that he was not a all worried about cryptocurrencies. In his words:

“They fail the basic tests of financial services. They’re not a great unit of exchange, they don’t hold value, and they’re slower. One of the biggest challenges for the BOE will be how to regulate new entrants to the banking system, particularly from technology firms.”

To a question about the similarity between banks and Bitcoin in terms of volatility, Steenis said that customers want cheaper, faster and better services. He also stated:

“What I love when meeting with Fintechs is their obsession with customers. The challenge is will they get customers before the traditional banks can innovate.”

The BoE official stressed the fact that the field of cryptocurrencies was not high on his worry list as they could not compete with the traditional systems.

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