Source: AdobeStock / Iakov Kalinin

Andrew Bailey, Bank of England governor, says cryptos lost its momentum to keep up a in the mainstream payments system.

He stressed that cryptos such as Bitcoin are “pretty inefficient” as a payment method as it has not “keep up the momentum.”

“My own sense is that it’s not taking off as what I might call a core financial service,” he said during UK Parliament’s Treasury Committee on Wednesday. “For instance, using Bitcoin as a payments method is pretty inefficient.”

Bailey also urged regulators to “keep a very close eye” on the crypto sector. He compared the current lack in the growth of the asset class with its momentum a few years ago.

“We had a bit of momentum a few years ago,” Bailey noted. “It actually hasn’t kept up.” He also reiterated his stance that un-backed crypto assets have no intrinsic value.

The UK government recently set new regulations, requiring crypto firms to inform clients about the risks involved in trading cryptos, starting Monday, January 8th. As a result, crypto platforms including Coinbase, Crypto.com, and Gemini have implemented risk assessments and finance tests for their UK users.

BoE’s Deputy Governor Highlights Lack of Clear Regulation

During the same hearing, Sarah Breeden, BoE’s deputy governor for financial stability, said that lack of clear crypto regulatory framework has hampered traditional finance adopting cryptocurrencies.

However, she noted that this trend is changing and the lack of regulation has enabled mainstream finance to involve in crypto “in a safe way.”

She also noted that regulators are stepping up in the crypto space with decisions like the US SEC’s approval of a Bitcoin exchange-traded funds (ETFs).

Both officials stressed potential risks involved in stablecoins. Bailey noted that the stablecoins still remain “opaque.” They also discussed briefly on the possibility of central bank digital currency (CBDC) for the UK – dubbed ‘Britcoin’ – and noted the privacy issues that are still being considered.

The discussions follow the UK’s plans to bring fiat-backed stablecoins under the purview of the Bank of England, Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR), announced last October.

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