Jon Cunliffe, Deputy Governor of the Bank of England, was the latest to compare the dot-com bubble with the current cryptocurrency crash.
Cunliffe stated that he believes crypto technology and finance will survive the next few months. The exec pointed out that crypto and its underlying technology have important applications and potential in the financial sector despite the constant declines.
The Deputy Governor spoke at the Point Zero Forum in Zurich.
“The dot-com boom, when $5 trillion was erased from values, is my analogy. Although many companies left, the technology did not disappear. It returned 10 years later and the Amazons, eBays, and other survivors proved to be the dominant players.
I believe crypto technology and finance will continue regardless of what happens to crypto-assets over the next few months. It offers the potential for huge efficiencies and market structure changes.
He said that the emerging crypto market players could transform into the technology companies to rival the existing giants like Amazon and eBay.
The result was widespread lay-offs, and scammers ran riot as crypto’s popularity waned. Along with cryptocurrencies, the stablecoin market suffered a huge blow.
Many regulators were furious at the fall of TerraUSD, one of the stablecoin markets. One of them, the Bank of England, criticized stablecoins and said that they were unstable soon after UST collapsed.
It is instead developing a digital currency for retail central banks. A consultation paper will be available by year’s end. The BOE is looking into whether to create an independent CBDC that can be used to make private stablecoins or with fiat money.
However, the core issue for BOE is whether private stablecoins are better than central bank ledgers.
The regulators will face major problems if they allow a “fully disintegrated settlement”. This system would require regulation of the AI code behind crypto technology. Cunliffe believes that this would make it very difficult for the regulatory systems to overcome in the near future.