Cryptocurrencies could cause huge market crash warns Bank of England: Market Wrap

LONDON: The cryptocurrency dogecoin jumped more than 20 percent on Friday as Tesla began accepting it as payment for merchandise on its online store.

“Tesla merchandise is purchasable with Dogecoin,” Tesla CEO Elon Musk tweeted, honoring a pledge he made in December 2021.

The digital currency, which was originally created as a joke in 2013 but has since been considered a legitimate investment product, was 14 percent higher at $0.1972 as of 10:19 am in London.

Musk helped Dogecoin surge about 4,000 percent in 2021 with tweets like “How much is that dog in the window?” It claims to “encrypt people”.

Electronic Pound Warning

The central bank digital currency managed by the Bank of England and used by consumers could harm financial stability, raise the cost of credit and reduce privacy, but a release for wholesale use in the financial sector requires greater evaluation, a committee of the British House of Representatives. Lords said on Thursday.

The Bank of England and the Treasury said in November that they would hold consultations in 2022 on whether to go ahead with central bank digital currencies to be introduced after 2025 at the earliest.

Central banks globally have stepped up their central bank digital currency plans to fend off potential risks from private cryptocurrencies that dominate digital payments. However, the commission said that the electronic pound used for daily payments could cause people to move money from bank accounts to digital wallets, undermining banks and causing financial instability.

The Economic Affairs Committee said it could also increase borrowing costs as banks lost one of their main sources of funding. She said the central bank’s ability to monitor transactions could harm privacy as well.

Michael Forsyth, chair of the commission, told Reuters that many of the benefits of digital currencies for customers “can be achieved through alternative means with less risk,” noting that regulation would be a better tool to fend off the threat of cryptocurrencies issued by major technology companies.

However, the report said that wholesale central bank digital currency used to transfer large amounts of money could make securities trading and settlement more efficient. She added that the British Central Bank and the Ministry of Finance should consult on its advantages in relation to the expansion of the current settlement system.

The report said the British Parliament should have the final say on any decision to launch the e-pound, calling on lawmakers to also vote on its ruling.

Consider the NFT gap

Apparel retailer Gap launched non-fungible tokens for its popular hoodies on Thursday, helping its shares surge nearly 5 percent.

The company’s push toward virtual assets follows similar moves by brands such as Nike, which last month announced its acquisition of NFT maker RTFKT. Mattel Inc. has also launched. NFT versions of Barbie and Hot Wheels lines.

While NFTs of artwork have sold for millions of dollars in the past year, Gap said prices for its NFTs will range from $8.30 to $415 for collectibles that come with a physical hoodie.

Gap is collaborating with Brandon Sines, the artist behind the Frank Ape animation, on the NFT group that is hosted on the Tezos blockchain.