Bitcoin could “practically drop to zero”, according to Sir John Cunliffe, the Bank of England’s deputy governor for financial stability.

The executive told the BBC’s Today program that the central bank needs to “roll our sleeves up and get on with it, so that by the time this becomes a much bigger issue, we’ve actually got the regulatory framework to contain the risks”.

Only around 0.1 per cent of the wealth of UK households is currently held in cryptocurrencies according to Cuncliffe, with about 2.3 million people estimated to hold them with an average value of around £300 per person.

Despite currently accounting for a relatively small portion of UK citizens’ wealth, Cuncliffe said investing in cryptocurrencies is becoming increasingly more mainstream and that institutional investors are wanting to know whether to include cryptocurrency as part of their portfolios.

"Their price can vary quite considerably and they could theoretically or practically drop to zero," said Cunliffe. "The point, I think, at which one worries is when it becomes integrated into the financial system, when a big price correction could really affect other markets and affect established financial market players.”

He added: "It's not there yet, but it takes time to design standards and regulations."

Some UK authorities have already implemented regulations relating to cryptocurrency; the Advertising Standards Authority (ASA) today banned seven adverts promoting cryptocurrencies.

The news comes as governments worldwide are looking into introducing stricter regulations regarding cryptocurrency; the Indian government could potentially “prohibit all private cryptocurrencies” in a newly proposed bill, according to a parliamentary bulletin from November 23.

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