The Bank of England has again warned that fast-growing crypto-currency assets could be a threat to the UK’s long-established financial system.
Deputy Bank governor Sir Jon Cunliffe told the BBC that although currently, just 0.1% of UK households’ wealth is in cryptos, it is becoming increasingly more mainstream.
If the values of some major cryptos fell significantly, it could have a serious knock-on effect for the wider economy, he added.
"The point at which one worries is when it becomes integrated into the financial system, when a big price correction could really affect other markets and affect established financial market players,” Cunliffe stated.
It is estimated that approximately 2.3mln people hold cryptos with an average of £300 per person.
"Their price can vary quite considerably and they could theoretically or practically drop to zero," Cunliffe said.
He added: "We really need to roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we've actually got the regulatory framework to contain the risks."
The Bank of England's financial stability committee said yesterday in its latest Financial Stability Report that the financial system has returned to pre-pandemic levels.
"Major UK banks are strong enough to keep supporting households and businesses, even in severe scenarios," the Bank said.