‘Britcoin’ may soon be a reality after the Bank of England says it is looking more deeply into a digital pound

A close-up of a replica bitcion is seen with a British flag
A close-up of a replica bitcoin is seen with a British flag

  • The Bank of England said it would look more closely at launching its own digital currency.
  • There no decision yet on “Britcoin,” but a digital currency would complement, not replace, banknotes, it said.
  • One possible scenario is one-fifth of all UK retail bank deposits are in a new form of digital money.
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The Bank of England is going to look more closely at launching its own digital currency, although it is still to make a decision on whether to introduce one.

The BoE on Monday released a discussion paper seeking response to its thoughts on a central-bank digital currency, which it put forward last year, as it believes it should “at the very least, be carefully studying CBDCs,” it said.

“The Bank of England has not made a decision on whether to introduce CBDC, but is committed to engaging widely on the benefits, risks and practicalities of doing so,” it said in a statement. “The Bank now intends to deepen its exploration of CBDC.”

CBDCs are effectively cryptocurrencies that are pegged to a national currency and controlled by the central bank. They operate as “stablecoins” – a digital token whose value is pegged to an underlying asset. The key difference between a stablecoin and a CBDC is the former is controlled by a private-sector entity.

Interest in digital currencies among central banks is picking up, as investors big and small jump onto the cryptocurrency bandwagon. Virtually every cryptocurrency, from bitcoin to ether, has hit record highs this year.

China is already running trials of its digital yuan, while the Federal Reserve plans to release a discussion paper in the coming weeks about its thoughts on digital payments. Jon Cunliffe, the BoE’s deputy governor, said last month it was “probable” the central bank would launch its own digital currency, which market watchers have nicknamed “Britcoin”.

“A CBDC could contribute to a more resilient, innovative and competitive payment system, but it would also raise significant questions for the economy and financial system,” Cunliffe said in Monday’s statement.

“The Bank has not yet made a decision on whether to introduce a CBDC. Were it to do so, any CBDC would complement, rather than replace, banknotes,” he added.

In its paper, the BoE laid out a scenario to illustrate what might be the demand for alternative means of payment. Under its model, it estimates 20% of all UK retail deposits will be in new forms of digital money.

“In the illustrative example, a fifth of all UK retail deposits transfer to new forms of digital money. Factors such as convenience, trust, and perceived safety are assumed to play a key role in determining demand for new forms of digital money,” it said.

The central bank plans to join forces with the UK’s finance ministry, the Treasury, to explore the public-policy issues around a CBDC, in order to look more closely into the potential launch of a digital currency. Any CBDC could only be harnessed if it is widely used and easily accessible to a broad range of groups in society, it said.

In addition to respecting users’ privacy, any CBDC would comply with the rules around money laundering or financing crime that exist for current digital payment systems.

Crucially, any CBDC should not interfere with the BoE’s ability to manage monetary policy and ensure financial stability. “For example, the Bank will carefully consider any risks associated with the outflow of deposits from the commercial banking sector,” the BoE said in the paper.

The central bank stressed in the paper that it supports efforts to improve payments in the UK, where these are safe, viable and well understood.

“A CBDC should only be introduced if it adds sufficient value and delivers net benefits, and if launched, should be designed to co-exist with other payments innovations. When exploring CBDC, the Bank will also give full recognition to the potential of private sector alternatives to deliver the outcomes sought,” it said.

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JPMorgan CEO Jamie Dimon warns investors not to buy crypto – and calls for clearer rules around trading it

jamie dimon
Jamie Dimon.

  • Jamie Dimon cautioned investors against owning cryptocurrencies.
  • The JPMorgan boss sees little value in them relative to gold and fiat currencies.
  • Dimon urged lawmakers to regulate crypto more closely.
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Jamie Dimon blasted cryptocurrencies as inferior to traditional assets, warned people against buying them, and urged regulators to scrutinize them more closely at a congressional hearing this week.

“Something that’s not supported by anything, I do not believe has much value,” the JPMorgan CEO said. Blockchain and stablecoins aren’t in that camp, and his opinion doesn’t dictate whether his company embraces crypto, he added.

“My own personal advice to people is stay away from it,” Dimon said. “That does not mean the clients don’t want it – this goes back to how you have to run a business. I don’t smoke marijuana, but if you make it nationally legal, I’m not gonna stop our people from banking it.”

JPMorgan is exploring ways to allow clients to buy and sell crypto and have it appear on their statements, the bank’s chief said. However, he reiterated his view that crypto pales in comparison to conventional assets, and carries a lot more risk.

“It’s nothing like a fiat currency, it’s nothing like gold,” Dimon said. “Buyer beware.”

The executive also bemoaned the lack of rules in the crypto space, which he described as a “serious emerging issue” in his latest shareholder letter.

“The regulators who are a day late and a dollar short should be paying a lot more attention,” he said, highlighting crypto, payment for order flow, and high-frequency trading as areas of concern.

Bitcoin surged in price from under $10,000 a year ago to north of $60,000 in April, and continues to trade at north of $30,000. Dimon said he wasn’t a fan of the coin earlier this month, and has dismissed it as fraudulent and dangerous in the past.

“It’s worse than tulip bulbs,” he said in 2017. “It won’t end well. Someone is going to get killed.”

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JPMorgan says the recent cryptocurrency plunge and shift into riskier altcoin bets looks a lot like the 2017 collapse

Bitcoin Bubble
Bitcoin replica coins are seen on November 13, 2017.

  • Crypto’s recent plunge bears some resemblance to the 2017 collapse, JPMorgan said.
  • The firm’s Josh Younger noted that like the end of the 2017 bull cycle, investors are beginning to diversify out of bitcoin and ether and into riskier altcoins.
  • But Younger also said the crypto market is more resilient than it was in 2017.
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The recent cryptocurrency sell-off that saw bitcoin fall over 50% from its highs looks a lot like the collapse at the end of crypto’s previous bull cycle, JPMorgan’s head of interest-rate derivatives strategy said.

In a Monday note, Josh Younger said that although the recent run-up in the total cryptocurrency market capitalization was more gradual than the 2017-2018 cycle, the unwind bears some resemblance to the collapse.

The pace and magnitude of the unwind looks “eerily similar” to the previous cycle, he said. And just like in 2017, investors have begun to diversify away from bitcoin and ethereum and into stablecoins and altcoins. As the crypto frenzy continues, investors buy riskier and riskier assets.

This risky pivoting combined with negative momentum signals and institutional outflows “should caution any view that the worst is clearly behind us,” Younger warned.

However, he also acknowledged there are a number of differences between the two cycles. This time around, the market hasn’t seen the frothiness that stemmed from the frenzy of ICO’s (initial coin offerings.)

Also, there’s been more institutional sponsorship in this current cycle, continued development and maturation of market infrastructure, broader and cheaper availability of leverage, and the rise of DeFi projects, Younger said.

The strategist concludes that crypto is in the middle of a “sizeable correction,” and it’s too early to call the bottom, but the resilience of the crypto market structure is a “positive technical backdrop” for a recovery.

“We continue to see evidence of resilient microstructure in cryptocurrency markets: the volatility spike appears somewhat regionally localized, market depth is down but has not cratered despite these moves, and derivatives pricing has managed to adjust quickly enough to retain a decent fraction of the levered long base,” Younger said. “This all argues against the view that we are in the midst self-reinforcing vicious cycle of price declines-a classic run scenario.”

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Mark Zuckerberg named his goat ‘Bitcoin’ – and fans of the cryptocurrency are taking it as an endorsement

Mark Zuckerberg
Mark Zuckerberg.

After Facebook CEO Mark Zuckerberg shared a picture of his two pet goats on Monday, introducing them to the world as Bitcoin and Max, crypto fans started trying to figure out the significance of the names.

The crypto community overwhelmingly took the name Bitcoin as an endorsement of the digital currency. But the theories didn’t end there.

Many people on social media referred to speculation about Facebook buying bitcoin that had surfaced before its quarterly earnings call in April. There was no mention of bitcoin purchases at the time, but some people think Zuckerberg will announce bitcoin investments at Facebook’s annual shareholder meeting later this month.

Others took Zuckerberg’s post a step further. “Is Mark Zuckerberg telling us he is a bitcoin maximalist with the names of his goats?” Anthony Pompliano, a crypto investor and personality, tweeted. Bitcoin maximalists believe that no other cryptocurrency will be used or needed in the future.

This would contradict Facebook’s efforts to develop a stablecoin, diem, which is set to be trialed later this year and would initially focus on user transactions. Diem would be pegged to the dollar and could be used to purchase goods and services, CNBC reported last month.

Some expect that multiple coins, each tied to a fiat currency, and a coin tied to multiple national currencies will be launched eventually.

Diem is a rebranded version of libra, Facebook’s crypto-coin project that envisioned one global coin tied to a basket of fiat currencies and linked to Facebook’s platform. Concerns about the effect on the global monetary system of a global digital coin owned by a social-media network led to the pivot to diem.

Some crypto fans might see Zuckerberg’s post as a threat rather than an endorsement. The Facebook boss said in 2011 that he would eat meat only from animals he’d killed himself, and Twitter CEO Jack Dorsey told Rolling Stone in 2019 that Zuckerberg had once served him a goat that he’d killed.

Bitcoin, which has swung from highs of about $65,000 to as low as $49,000 over the past month, dropped after Zuckerberg’s post; it was trading at about $55,727 on Tuesday.

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