The Bank of England cannot ignore crypto any longer
Crypto has long been shunned by the finance world. Historically, it’s been too volatile, too risky, and too intangible for institutional investors – and governments – to take seriously.
With Trump’s re-ascendence, however, these are void. Crypto, especially Bitcoin, is becoming an increasingly valuable and stable asset, and level-headed institutions – including central banks – are flocking over, building their positions in the market. It might be time for the Bank’s very own Governor, Bailey, to follow suit.
Let’s look back at the last few months – and more specifically, Trump’s re-election. Throughout the campaign trail, the 45th President vowed to make the US “the crypto capital of the planet” – and while I initially saw past the rhetoric, for now at least, it seems he’s making good on his promises.
He’s appointed Scott Bessent as his Treasury Secretary and Howard Lutnick as his Secretary of Commerce, both of which are pro-crypto, and nominated Paul Atkins, another digital-asset advocate, as Gensler’s successor to the SEC – the US’ primary Wall Street watchdog. Trump has tapped the right personnel to build and sophisticate the country’s crypto scene.
But further than that, he’s also established a strategic crypto reserve, launched his own $Trump meme coin, and most recently, is set to launch a stablecoin backed by US treasuries. All the doubts I had before his inauguration have been dispelled. Say what you want about the new President, but you can’t deny he’s ‘all-in' on crypto.
Of course, this begs the question: why should central banks, including the Bank of England, care? For that, we need to take a look at the market.
Under the various moves and countermoves of the Trump administration, Bitcoin has seen record highs, peaking at $100,000 earlier last December. And while – just like all US assets – it has been affected by his capricious policymaking, the coin is still trading much higher, over $10,000, than it did this time last year. And it’s not just BTC: ETH, XRP, and SOL have all, in one way or another, felt the joys of the new government.
Other central banks have caught on. Bar El Salvador, which has already welcomed Bitcoin as an official national currency, recently, the Czech Central Bank has been mulling over buying billions in BTC as a reserve asset. Plus, if anything, with the EU’s MiCA regulations now implemented – which outline a thorough regulatory framework for digital assets and their associated exchanges – more central banks across the continent will only usher closer to crypto. Confidence in major cryptocurrencies will only strengthen.
So, here’s the lowdown. The trend is already underway, and I would urge Bailey and his team at the Bank of England to jump on this train well before it leaves the station.
I recognise I might be a biased voice, but I’d still urge the Bank of England to make this move – and initiate the process of creating a Bitcoin reserve. As the UK navigates the headwinds of policies and movements abroad, it’s vital that the Bank hedges against traditional market volatility – and builds value across various asset classes. And being the market’s most celebrated, most valuable ‘poster child,’ Bitcoin is the obvious pick of the bunch.
As the Trump administration continues to unveil, execute, and implement its pro-crypto policies, Bitcoin will only become more stable and liquid. Several institutions and central banks are already eying up Bitcoin as a viable investment, and as it increases its presence in the mainstream, we could see not just consumers but investors and governors migrate across in droves.
The UK – let alone the Bank or the FCA – has historically been suspicious, and at times fearful, of crypto. And if we were still in the midst of the 2018 crash, I’d somewhat understand.
The UK – let alone the Bank or the FCA – has historically been suspicious, and at times fearful, of crypto. And if we were still in the midst of the 2018 crash, I’d somewhat understand.
That said, this attitude is becoming increasingly untenable. As an ostensibly ‘pro-innovation’ country, the UK should embrace all the new developments the business world and financial markets offer. Within that, crypto has firmly established itself at the forefront of the financial ecosystem, and its relevancy and viability will only greaten.
It’s not a leap of faith, and it’s not a risky move. Andrew Bailey and his team at the Bank of England must embrace crypto now. That starts with building a Bitcoin reserve.
Fiorenzo Manganiello is the co-founder and managing partner of LIAN Group. He is an outspoken commentator across the media, previously featuring as a guest author in the likes of Digital Frontier and CoinDesk. You can follow more updates from him on LinkedIn and X.
