Much like watching somebody stand too close to the edge of a rooftop can bring on the heebie-jeebies, the City’s institutions giving a guarded welcome to more crypto-backed vehicles can also leave an observer a little nervy.
It is not that long ago that we were in the ‘crypto winter,’ watching token prices crash and seeing some very well known individuals banged up for 110-year stretches. With Bitcoin at a record high and the Stock Exchange putting the welcome mat out to exchange-traded notes, all of that seems forgotten.
There is nothing inherently wrong with cryptocurrencies; there is nothing inherently right about them, either, since there isn’t anything inherent to them at all. Like all fiat currencies, they’re fundamentally fictions – albeit dressed up in tech babble and with some very impressive technology behind it.
The fear, of course, is that unsophisticated investors see the City giving a guarded thumbs up to crypto (the nuance will be lost, we can assure you) and pile in their life savings into a bet just as risky, if not more so, than today’s 1:30 at Cheltenham.
Perhaps the crypto mania is the price we have to pay for the more exciting technology behind it. The blockchain is, genuinely, transformative stuff, and as more use cases develop (would you like to own a small, tokenised bit of Covent Garden as your way of betting on real estate values increasing? What about a small bit of a football club?) the value of it will become clearer.
But it will now be on the regulator and the City’s institutions to keep a very close eye on the crypto world it has just given the thumbs-up to. To speak in understatements, this has so far not proven to be a world entirely full of good actors.
Let’s hope London’s new crypto capital status doesn’t prove a poor gamble.