A Bank of England deputy governor has likened the crash in cryptocurrencies to the Hindenburg airship disaster as he called for regulation to ensure the technology’s potential benefits are not lost.
Bitcoin, the best-known cryptocurrency, has lost more than two-thirds of its value since hitting nearly $69,000 in November as investors fret over weakening global growth, high inflation and rising interest rates.
But Sir Jon Cunliffe said in a speech in Singapore that it does not mean ‘that crypto is somehow over and we do not need to be concerned about it any more’.
Bank of England deputy governor Sir Jon Cunliffe called for tech industry pioneers to work with regulators and other authorities to develop the right regulation for cryptocurrencies
In the past, he said innovations have been abandoned because of dramatic failures, citing the deadly disaster in 1937 when a hydrogen-powered German airship crashed in New Jersey.
‘While the causes of the Hindenburg Zeppelin disaster are still debated, it is very probable that the general development of the use of hydrogen in transport was put aside for decades as a result.’
Cunliffe argued that some of the technologies being developed in the crypto world could mean lower costs, greater speed and more transparency for investors.
‘A succession of crypto winters will not, in the end, help the development and adoption of these technologies and the reaping of the benefits that they may offer,’ he added.
Cunliffe called for tech industry pioneers to work with regulators and other authorities to develop the right regulation.
And he also drew an analogy with the dotcom crash two decades ago when the valuations of early online firms slumped.
‘The technology did not go away but rather re-emerged in a different form, focused on the development of platforms which have now come to dominate internet commerce,’ he said.
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