England Not Taking Bitcoin Seriously

England Not Taking Bitcoin Seriously

As Bitcoin’s bull run begins to settle above the $16,000 mark, financial institutions and regulators are still skeptical of the meteoric rise in value.

England’s Financial Conduct Authority (FCA) Head Andrew Bailey maintains that Bitcoin is a speculative bubble and new, green investors are going to lose the money they’ve invested in the cryptocurrency.

As quoted by The Independent, Bailey hit out at the decentralized cryptocurrency:

“It’s not a currency, it’s actually not regulated in its Bitcoin form. It’s a very volatile commodity in terms of its pricing.”

Confusion around value

The British regulator expressed misgivings about the mystery way Bitcoin is valued. Considering the cryptocurrency has seen more than a 1,000 percent rise in value in 12 months, he predicted investors would lose all their money:

“If you look at what has happened this year, I would caution people. We know relatively little about what informs the price of Bitcoin. It’s an odd commodity as well, as the supply is fixed. If you want to invest in Bitcoin be prepared to lose your money – that would be my serious warning.”

Bailey did concede that Bitcoin is also categorized as a commodity, given that it has a finite cap at 21 mln coins. Commodities are regulated in different ways to currencies in the UK.

The FCA head echoed the sentiments of Bank of England Deputy Governor Sir John Cunliffe, who cautioned investors in November to do their homework before investing in what he classified a commodity as well:

“This is not at a size where it’s a macroeconomic risk to the global economy, but when prices are moving like that, my view would be investors need to do their homework. This is not a currency in the accepted sense. There’s no central bank that stands behind it. For me, it’s much more like a commodity.”

In November, an analyst drew comparisons to the dot.com bubble of the 1990s, ultimately highlighting supply/demand as the driving factor of Bitcoin’s value. The amount of supply of the virtual currency could be its undoing in the future, according to that report.

Another analysis looks at multiple facets that have traditional institutional investors nervous about cryptocurrencies.

England not taking crypto seriously

Despite Bailey’s warnings to potential investors looking to enter the cryptocurrency market, the FCA granted a local company permission to launch its own digital currency. At the time, Bitcoin was hovering just above the $1,000 mark – so there was nowhere near the same hype around the value of Bitcoin.

Similarly, Coutts Bank, who is responsible for the Royal Family’s banking, refuse to invest in cryptocurrencies.