London Daily

Focus on the big picture.
Monday, Sep 22, 2025

Crypto could cause 2008-level meltdown, Bank of England official warns

Crypto could cause 2008-level meltdown, Bank of England official warns

The Bank of England's deputy governor for financial stability, Jon Cunliffe, has warned that cryptocurrencies could spark a global financial crisis unless tough regulations are introduced. Cunliffe likened the rate of growth of the cryptoasset market, from $16 billion five years ago to $2.3 trillion today, to the $1.2 trillion subprime mortgage market in 2008. Regulators around the world have begun work to establish a common policy framework to protect the banks from the public interest, to manage the exponential growth of cryptoassets, but Cunliffe said this must be pursued as a matter of urgency.

The Bank of England’s deputy governor for financial stability, Jon Cunliffe, has warned that cryptocurrencies could spark a global financial crisis unless tough regulations are introduced.

In a speech Wednesday, Cunliffe likened the rate of growth of the cryptoasset market, from $16 billion five years ago to $2.3 trillion today, to the $1.2 trillion subprime mortgage market in 2008.

“When something in the financial system is growing very fast, and growing in largely unregulated space, financial stability authorities have to sit up and take notice,” he said.


Regulators protecting the establishment, not the public

Cunliffe acknowledged that governments and regulators must be careful not to overreact or classify new approaches as “dangerous” simply because they are different, and also noted that crypto technologies offer a prospect of “radical improvements” in financial services.

However, he contended that although financial stability risks remain limited for now, the current applications of cryptoassets pose a financial stability concern since the majority “have no intrinsic value and are vulnerable to major price corrections.”

Bitcoin and ethereum, the two largest cryptocurrencies, plunged more than 30% in value earlier this year before recovering, and have proven extremely volatile since their creation. Prices are susceptible to a variety of external triggers, from comments by Tesla CEO Elon Musk to regulatory crackdowns by the Chinese government.

“The crypto world is beginning to connect to the traditional financial system and we are seeing the emergence of leveraged players. And, crucially, this is happening in largely unregulated space,” Cunliffe said.

His comments echo those of Bank of England Governor Andrew Bailey in May, who cautioned that cryptocurrency investors should be prepared to lose all their money due to the assets’ lack of “intrinsic value.”

The U.K.’s Financial Conduct Authority has also warned of the risky nature of crypto investment.

Cunliffe said the risk to financial stability could grow rapidly if the market continues to expand at such a pace, but the scale of those risks will be determined by the speed of response by regulators and governments.

The price of bitcoin has fallen by 10% in a single day on almost 30 occasions in the past five years, he pointed out, the largest of which was a fall of nearly 40% after a cyber-incident at Seychelles-based bitcoin and cryptocurrency exchange BitMEX.

“The forward looking question is what could result from such events, if these cryptoassets continue to grow at scale, if they continue to become more integrated into the traditional financial sector and if investment strategies continue to become more complex?” Cunliffe said.

Central to whether major price corrections can be absorbed by the system, saddling some investors with painful losses but avoiding a knock-on impact on the real economy, depends primarily on interconnectedness and leverage, Cunliffe argued.

Both of these were present in the subprime mortgage market prior to 2008, enabling the knock-on effects that ultimately brought the global economy to its knees, and both are becoming increasingly prominent in the crypto space, Cunliffe suggested. He said it will be down to authorities to manage this increasing risk and ensure that the system is resilient to major corrections.

“Although crypto finance operates in novel ways, well-designed standards and regulation could and should enable risks to be managed in the crypto world as they are managed in the world of traditional finance,” Cunliffe said.

Many regulators around the world have begun work to establish a public policy framework through which to manage the exponential growth of cryptoassets, but Cunliffe said this must be pursued as a matter of urgency.

“Technology and innovation have driven improvement in finance throughout history. Crypto technology offers great opportunity. As [Ralph Waldo] Emerson said: ‘if you build a better mousetrap the world will beat a path to your door’,” he said.

“But it has to be a truly better mousetrap and not one that simply operates to lower standards — or to no standards at all.”

Newsletter

Related Articles

0:00
0:00
Close
Explosive Email Shows Sarah Ferguson Begged Forgiveness from Jeffrey Epstein After Taking His Money
Corrupt UK Politician Ed Davey Demands Elon Musk’s Arrest for Supporting Democracy
UK, Canada, and Australia Officially Recognise Palestine in Historic Shift
Alibaba Debuts Open-Source Deep Research Agent with Benchmarks Rivaling OpenAI
Marcos Faces Legacy-Defining Crisis as Flood Projects Scandal Sparks Massive Tide of Protests
China’s Micro-Drama Boom Turns Stalled Real Estate Projects into Lavish Film Sets
New Eye Drops Show Promise in Replacing Reading Glasses for Presbyopia
'Company Got 5,189 H-1B Visas, Then Laid Off 16,000 Americans': US Defends New $100,000 H-1B Visa Fee
Golf legend tells Omar she should be 'sent back to Somalia' after her Kirk comments
EU Set to Bar Big Tech from New Financial Data Access Scheme
China Bans Livestreaming and AI in Religion Amid Crackdown on Shaolin Temple Scandal
Documents Reveal Mandelson Failed to Declare Epstein-Funded Flights as MP in 2003
Dubai Property Boom Shows Strain as Flippers Get Buyer’s Remorse
Harris Memoir Sparks Backlash from Democrats for Blunt Critiques in ‘107 Days’
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Japan’s ‘Death-Tainted’ Homes Gain Appeal as Prices Soar in Tokyo
Massive Attack Withdraws from Spotify Over Daniel Ek’s €600M Defence-AI Investment
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
Top AI Researchers Are Heading Back to China as U.S. Struggles to Keep Pace
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders Third Lethal Strike on Drug-Trafficking Vessel as U.S. Expands Maritime Counter-Narcotics Operations
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
Why Google Search Is Fading and AI Is Taking Its Place
UAE-US Stargate Project Poised to Make Abu Dhabi a Global AI Powerhouse
Federal Judge Dismisses Trump’s Fifteen-Billion-Dollar Suit Against New York Times, Orders Refile
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
DeepSeek Claims R1 Model Trained for only $294,000, Sparking Global Debate Over China’s AI Capabilities
SoftBank Vision Fund to Cut Nearly Twenty Percent of Staff in Bold AI Strategy Shift
Intel’s Next-Gen Manufacturing Gets a Lifeline from Nvidia’s Strategic $5B Deal
Erika Kirk Elected CEO of Turning Point USA After Husband Charlie Kirk’s Assassination
Massive Strikes in France Pressure Macron and New PM on Austerity Proposals
Trump Seeks Supreme Court Permission to Remove Fed Governor Lisa Cook
Hillary Clinton’s Reckless Rhetoric Fuels Division After Charlie Kirk’s Assassination
NASDAQ Rises to Record as Intel Soars More Than 20%, Nvidia Gains 3%
Nvidia’s $5 Billion Bet on Intel Reshapes AI Hardware Landscape
Trump and Starmer Clash Over UK Recognition of Palestinian State Amid State Visit
Trump’s Quip on Biden and Google Lawsuit Revives Debate Over Antitrust Legacy
Macron and his wife to provide 'scientific photographic evidence' that she is a real woman
US Tech Giants Pledge Billions to UK AI Infrastructure Following Starmer's Call
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
DeepMind and OpenAI Achieve Gold at ‘Coding Olympics’ in AI Milestone
SEC Allows Public Companies to Block Investors from Class-Action Lawsuits
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Federal Reserve Cuts Rates by Quarter Point and Signals More to Come
Effective and Impressive Generation Z Protest: Images from the Riots in Nepal
European manufacturers against ban on polluting cars: "The industry may collapse"
Sam Altman sells the 'Wedding Estate' in Hawaii for 49 million dollars
×