Bank of England Says Crypto Has Grown to Twice the Size of Subprime Debt in 2008

The BoE’s deputy governor of financial stability said that crypto now potentially poses a risk to the global financial system.

By Nelson Wang

Oct 14, 2021 at 9:25 p.m. UTC

The Bank of England (Shutterstock) — The Bank of England

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Crypto assets have grown rapidly from just $16 billion five years ago to about $2.3 trillion today, and thus could pose a systemic risk to the global financial system, the Bank of England said on Wednesday.

While $2.3 trillion is small compared to the $250 trillion global financial system, it doesn’t take much to destabilize things. The sub-prime debt market was valued at around $1.2 trillion in 2008, just before the financial crisis, noted the BoE’s Jon Cunliffe, the bank’s deputy governor of financial stability in a speech.
”In that case, the knock-on effects of a price collapse in a relatively small market was amplified and reverberated through an un-resilient financial system causing huge and persistent economic damage,” Cunliffe said.
Cunliffe said that because the crypto industry is growing rapidly and beginning to connect to the traditional financial system, with the emergence of leveraged players and in a mostly unregulated space, systemic risks, while limited now, could grow very quickly.
He said that regulation should be “pursued as a matter of urgency” and quoted SEC chair Gary Gensler’s recent comment that “financial innovations throughout history do not flourish outside public policy frameworks.”

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Nelson Wang

Nelson Wang is CoinDesk's news editor for the East Coast. He holds BTC and ETH above CoinDesk's disclosure threshold of $1,000.

Follow @NelWang on Twitter

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Nelson Wang

Nelson Wang is CoinDesk's news editor for the East Coast. He holds BTC and ETH above CoinDesk's disclosure threshold of $1,000.

Follow @NelWang on Twitter