Bank of England warns crypto investors: “People should only buy cryptocurrencies if they’re ready to lose all their money”
On April 20, the Doge Day, SEC Commissioner Hester Peirce warned Dogecoin traders: “Don’t come complaining to the government if you lose money.” At the time, Dogecoin was trading at $0.0635. Since then, Dogecoin has gone up by more than 500%. Today, Dogecoin is trading 0.331 as of the time of writing.
Those who ignored her warning have seen their Dogecoin investment appreciated by $0.265. But does that mean she was wrong? Time will tell. However, it’s a different story for bitcoin investors. On April 10, bitcoin was trading at $59,295. Since then, the world’s most popular cryptocurrency has lost about 40% of its value, and it’s now trading at $35,507 as of 9 PM Eastern Time.
Given all the risks, volatility, and uncertainties associated with cryptocurrency investment, the governor of the Bank of England, Andrew Bailey, told investors they should be prepared to lose all their money if they dabble in cryptocurrencies.
Following the central bank’s interest rate decision last month, Bailey told journalists that he thinks “cryptocurrencies such as bitcoin have no value in their own right.”
“I would only emphasize what I’ve said quite a few times in recent years. I’m afraid they have no intrinsic value. “Now that doesn’t mean to say people don’t put value on them, because they can have extrinsic value. But they have no intrinsic value.”
Bailey added: “I’m sorry, I’m going to say this very bluntly again: buy them only if you’re prepared to lose all your money.”
Even though some crypto advocates see bitcoin as a store of value like “Digital Gold,” Baily is still very skeptical and not convinced. He said he does not believe cryptocurrency is truly currency. “I’m afraid currency and crypto are two words that don’t go together for me,” Bailey remarked.
Meanwhile, cryptocurrency dealers in the United Kingdom face closure for failing the UK money laundering test. The Financial Conduct Authority (FCA), a financial regulatory body in the United Kingdom, said that up to 50 companies dealing in digital assets and cryptocurrencies such as bitcoin could be forced to close after failing to meet Britain’s anti-money laundering and counter-terrorism financing rules.
In an announcement last week, the UK watchdog said that an “unprecedented number” of these companies had withdrawn their applications from a temporary permit scheme. FCA warned these firms that they fell short of anti-money laundering standards intended to stop criminals and terrorist groups from disguising the source of their money. FCA said:
“A significantly high number of businesses are not meeting the required standards under the Money Laundering Regulations. This has resulted in an unprecedented number of businesses withdrawing their applications.”
FCA added: “Many crypto assets are highly speculative and can therefore lose value quickly. The FCA does not have consumer protection powers for the crypto asset activities of firms.” The watchdog said that it will only “register firms where it is confident that processes are in place to identify and prevent this activity.”