The United Kingdom’s central bank has issued a warning for cryptocurrency investors: Bitcoin could become worthless.
According to a report in the British newspaper The Guardian, Bank of England deputy governor Jon Cunliffe said Bitcoin "could theoretically or practically drop to zero." The Bank of England is responsible for monetary policy in the United Kingdom with oversight duties comparable to those of the Federal Reserve in the United States.
Cunliffe said the Bank of England had to prepare for risks presented by Bitcoin and other cryptocurrencies, although he said there was little chance it would destabilize the UK financial system.
A post on the bank’s website noted that the coin’s inherent structure might eventually "render Bitcoin worthless" and the cryptocurrency’s persistent volatility may "induce the smart money to get out." If that happens, investors holding Bitcoin should "be prepared to lose everything."
The cryptocurrency craze, especially the roller-coaster ups and downs in the value of Bitcoin, has also caught the eye — and sometimes the ire — of U.S. regulators as they seek more oversight on how these digital currencies are bought, traded and promoted.
Security and Exchange chairman Gary Gensler said the largely unregulated nature of cryptocurrency markets makes it "like the Wild West." Gensler is pushing for more investor protections, noting that seamier parts of the cryptocurrency industry are "rife with fraud, scams and abuse."
The Federal Reserve, SEC and FDIC issued a rare joint document in December outlining plans to "provide greater clarity" on the "legal permissibility" of U.S. financial institutions offering cryptocurrencies.