Cryptocurrencies

Lord Sikka Excerpts

Tuesday 20th December 2022 Lords Chamber

[Lord Harlech (Con)]

Volatility is a characteristic of certain crypto assets. The FCA and the Bank of England have warned that crypto assets are high-risk and investors should be prepared to lose all their money. However, the Bank of England’s Financial Policy Committee continues to note that crypto asset markets do not pose a material risk to financial stability, although the stability risks will likely grow as connections between the traditional financial services sector and crypto markets increase. That is why the Treasury agrees with this assessment, which has been echoed by the Financial Stability Board.

[Lord Sikka (Lab)]

My Lords, the use of centralised peer-to-peer crypto lending platforms has surged and crypto lending services have become part of the shadow banking industry. Despite past hints, the Government have failed to regulate the shadow banking sector; it is not subject to any capital adequacy or stress tests. Does the Minister know that, by delaying the regulation of the shadow banking sector, he is laying the foundations for the next financial crash?

[Lord Harlech (Con)]

I certainly hope that I am not laying the foundations for the next financial crash. This Question is specifically about crypto assets, not shadow banking.