Carney says bitcoin has FAILED but critics say he's just PROVED how big cryptocurrency is

In a speech delivered to the Inaugural Scottish Economics conference in Edinburgh, Mr Carney branded cryptocurrencies such as bitcoin a "failure" and a lottery.

He said they exhibit all the "classic hallmarks of bubbles" which attract "fools".

Mr Carney said: "The prices of many cryptocurrencies have exhibited the classic hallmarks of bubbles including new paradigm justifications, broadening retail enthusiasm and extrapolative price expectations reliant in part on finding the greater fool.

"At present, crypto-assets raise a host of issues around consumer and investor protection, market integrity, money laundering, terrorism financing, tax evasion, and the circumvention of capital controls and international sanctions."

His comments come as Bitcoin's value continues to gyrate wildly, having rocketed to nearly 20,000 US dollars late last year before plunging and settling at 10,890 US dollars on Friday.

The Governor added: "A better path would be to regulate elements of the crypto-asset ecosystem to combat illicit activities, promote market integrity, and protect the safety and soundness of the financial system.

"The time has come to hold the crypto-asset ecosystem to the same standards as the rest of the financial system.

"Being part of the financial system brings enormous privileges, but with them great responsibilities."

Mr Carney said that, in his view, crypto-assets do not "appear to pose material risks to financial stability".

However, Mr Carney conceded that the distribute ledger technology which underpins cryptocurrencies can act to help the way payments are made evolve.

"Even if the current generation is not the answer, it is throwing down the gauntlet to the existing payment systems. These must now evolve to meet the demands of fully reliable, real-time, distributed transactions.

"The Bank believes that distributed ledger technology could over time significantly improve the accuracy, efficiency and security of processes across payments, clearing and settlement."

His speech has drew reaction from experts who say the BoE boss has proved cryptocurrencies potential.

Baroness Michelle Mone OBE, co-founder of EQUI a cryptocurrency-based platform for investment in new, innovative technology companies said: “Cryptocurrency has millions of people invested in it and it’s not going away.

"Mark Carney says that the underlying technology has a place in the future of money. I believe that cryptocurrencies are the future - the first Bitcoin was mined only nine years ago and now the governor of the Bank of English has a speech dedicated to it - just imagine where we’ll be in another nine years.”

However, the business guru added: “Mark Carney raises a very important point, that of regulation. The simple fact is we need it. Everybody who believes in cryptocurrencies agrees that we need regulation to move forwards, nobody wants this to be the wild west anymore. With regulation comes stability.

“What is clear that a huge amount of innovation is happening and this new technology is going to change the way we do things. It’s not just about digital money. As Mark says, with smart contracts we can create new assets with new mechanisms for payment. With EQUI we are doing just that and changing the way venture capital works. We’re giving power back to the people.”