According to Jon Cunliffe, deputy governor of Bank of England, the latest crypto slump could determine which industry’s future winners.
Jon Cunliffe, the Bank of England’s deputy Governor, has compared the current crypto market crash with the dot-com crash of late 1990s. He suggested that survivors could become the “Amazons or eBays” of tomorrow.
Cunliffe stated that the analogy to me was the dot-com boom, when $5 trillion was erased from values. This was reported by . “A lot of companies left, but the technology didn’t disappear.”
He said that 10 years later, the “most dominant players” were the Amazons and eBays.
The Deputy Governor stated that cryptocurrencies will continue to be used regardless of what happens in the next months. It offers the potential for huge efficiencies as well as changes in market structure.
Cunliffe also spoke about the Bank of England’s current thinking regarding stablecoins as well as central bank digital currencies. To explore the potential of a CBDC, the Bank of England created a taskforce in April 2021. Cunliffe stated that the Bank of England is currently investigating whether to create a CBDC independent from the Treasury with an “on-or-off ramp to fiat” or something that can be used in private stablecoins.
“The question is: Are you better off having private stabilitycoins to be optimized in certain areas, and then link back to the central bank ledger in a way? Or should we just provide the base? Cunliffe agreed.
The Bank of England declared earlier this year that it would intervene in the event of a stablecoin issuer “reaching systemic scale failure”. This announcement followed comments by Andrew Bailey, Bank of England governor in June 2021. It stated that stablecoins should also be regulated as banks handle payments.
The turmoil of crypto markets
Bitcoin is the world’s most popular cryptocurrency. It lost 70% of its value after peaking at nearly $70,000 in November 2017. The current price is $20,720 per CoinMarketCap.
The total market capitalization of all digital assets, once exceeding $3 trillion, has fallen dramatically over the past eight months. fell below the $1 trillion mark earlier this June due to the collapse in Terra ecosystem, and a liquidity crises among large crypto firms.
Many companies have moved to decrease their headcount, or cut costs as a result of the crash.
Many established crypto companies have seen their valuations drop due to the worsening economic climate.
In November 2021, the market capitalization for crypto exchange was almost $90 billion. According to Companiesmarketcap, the company’s value has dropped fourfold to $13.59 Billion.
Cunliffe is the most prominent person to give his opinion on how recent developments in crypto space will impact crypto businesses.
Mark Cuban, the billionaire owner and investor in the Dallas Mavericks, joined the discussion recently. He stated that companies that are supported by easy, cheap money, but don’t have viable business prospects, will disappear.