Cryptocurrencies are too volatile to be used for payment, and investors should prepare to lose all their money, BoE governor says

Bank of England Governor Andrew Bailey
Bank of England Governor Andrew Bailey. Photo by TOLGA AKMEN/POOL/AFP via Getty Images
  • Bank of England Governor Andrew Bailey said cryptocurrencies are not a good method of payment, Bloomberg reported.
  • “If you want to buy them then please understand that you can lose, you could lose all your money,” he said.
  • This isn’t the first time the governor has expressed skepticism towards cryptocurrencies.

Bank of England Governor Andrew Bailey said he believes that cryptocurrencies are not a reliable method of payment, highlighting their high volatility in comments made on Monday.

“They fluctuate in value substantially,” he said during a virtual conference, reported by Bloomberg. “Which is why they’re, on the whole, not a good medium for making payments.”

Bailey’s comment comes days after lawmakers in El Salvador voted to make bitcoin legal tender alongside the US dollar, the first country in the world to do so.

“Given the volatility of the asset value, and given the fact that there isn’t a real asset underpinning them, I’m afraid if you want to buy them then please understand that you can lose, you could lose all your money,” Bailey said.

Bitcoin on Monday moved past $40,000 after Elon Musk suggested Tesla might accept it as payment again once mining can be done using cleaner energy.

Musk’s reversal on accepting bitcoin as payment in mid-May sent shockwaves across the digital asset ecosystem and sent the price of bitcoin into a nosedive.

“We’re going to engage with users, the technology sector, to understand the potential for these things,” Bailey said. “And there’s a lot of work going on in the Bank of England to understand the implications of them for central banking.”

This isn’t the first time the BoE governor has expressed skepticism towards cryptocurrencies.

In May, he told journalists that cryptocurrencies have “no intrinsic value” and that people should only buy them if they are prepared to lose all their money.

“I’m afraid currency and crypto are two words that don’t go together for me,” he said.

The governor’s comments echoed the message from the UK’s Financial Conduct Authority earlier in the year as well as European Central Bank president Christine Lagarde, who once called bitcoin a “highly speculative asset which has conducted some funny business … and totally reprehensible money laundering activity.”

Though Bailey has his doubts about crypto, the Bank of England this month said it is looking closely at launching its own central bank digital currency.