The Bank of England’s Owen Lock has issued a warning over the role and risk of cryptoassets in the metaverse.
In a blog published on Bank Underground, Lock, who is part of the BofE’s resilience division, emphasised that the rise of the metaverse could lead to an expansion in the way regular households own digital assets.
The blog underlines that “All else equal, the larger the size of the cryptoasset market, the larger the risks are and the more systemic they might become. An important step is therefore for regulators to address risks from cryptoassets’ use in the metaverse before they reach systemic status.”
Nonetheless, Mike Crosbie, the CBO of poundtoken, has responded and defended the evolution of the digital currency space.
He stated: “The Bank of England is right to say that cryptoasset risks must be addressed, as the metaverse grows from its early stages. Currencies must be regulated with care and attention to ensure that people and businesses are protected from volatility. This takes time, and it’s right that regulators are taking steps to regulate cryptocurrencies and stablecoins.
“That said, we would like to address the Bank of England’s suggestion that stablecoins cannot match the necessary standards for the metaverse. Stablecoins have strived to ensure that they are as trustworthy as possible, working with regulators and custodians to improve security and protection. Our stablecoin, poundtoken (GBPT) is a good example of this; we are working closely with our regulator (the Financial Services Authority), and we are audited by KPMG.
“Currencies will evolve alongside reforms and regulations, towards the common goal of safety and stability for their users. As the metaverse develops, we anticipate that these risks will reduce over time. As the Bank of England says, the dangers of high-risk cryptoassets are a possibility rather than an inevitability. We anticipate that systematic stability will come as market forces strive toward trusted currencies in the metaverse.”