Mark Carney, who heads the G20's Financial Stability Board as well as being the governor of the Bank of England, has said that global rule-makers will examine digital currencies, given their explosion in popularity over the last year.
Mr Carney told the Treasury Select Committee that he expected the FSB to discuss distributed-ledger technology, which underpins cryptocurrencies, and digital currencies themselves.
He also said that a tightening up of the rules around initial coin offerings - a virtual way to raise funds - was necessary.
The Financial Conduct Authority said last week it would undertake a deep dive around ICOs as a prelude to potentially more regulatory action. While countries like China have banned ICOs, the UK has allowed them but has warned investors of their risks.
ICOs work by a company issuing tokens, typically in exchange for a cryptocurrency such as Ethereum. Tokens can be used to buy future services from the issuer or can be sold on. This year there have been 234 ICOs so far, raising a total of $3.7bn, according to data from Coinschedule, an ICO information provider.
Mr Carney was asked by the committee about bitcoin, which has seen its value soar this year from $1,000 per unit at the beginning of the year to over $17,000. He repeated previous statements from UK officials that despite the rise in bitcoin’s value, the authorities did not deem it as a risk to the UK’s overall financial stability.
He added that the BoE believes that the distributed-ledger technology underpinning bitcoin could be best applied to wholesale settlement technologies, but it was still some way off being deployed properly.
– Copyright The Financial Times Limited 2017
