Much tougher regulation to curb the “anarchy” of digital currencies like bitcoin is needed to protect consumers and ward off crime, Bank of England Governor Mark Carney warned on Friday.

Carney, whose speech was laced with scepticism over the “failings” of cryptocurrencies in fulfilling the role of traditional money, said the hugely volatile assets “raise a host of issues” around consumer and investor protection.

They also raised issues over money laundering, terrorism financing, tax evasion, and criminals evading capital controls and international sanctions, he said.

While the Canadian said the proliferation of cryptocurrencies does not pose “material risks” to overall financial stability, he added that their use to shield illicit activities “cannot be condoned”.

“Anarchy may reign on the dark web, but in the UK it’s just a song that your parents used to listen to,” he said.

While some smaller nations like Bangladesh, Bolivia, Ecuador and Morocco have outlawed cryptocurrencies, Carney (pictured) believes an outright ban would potentially stifle innovation in payment technology.

He added: “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.”

He is pushing for digital currency exchanges to be held to the same tougher standards as those that trade traditional securities to “address a major underlap in the regulatory approach”, potentially forcing much more stringent capital requirements on the exchanges.

The US Securities and Exchange Commission has also acted in recent weeks amid fraud concerns, taking a hard line on cryptocurrency providers over so-called “initial coin offerings” and sending subpoenas to dozens of companies for information on their businesses.

The Bank’s financial policy committee is considering the impact of cryptocurrencies on UK financial stability, while the Financial Stability Board will report to the G20 in Argentina this month.

The Governor’s comments come after a roller coaster ride for bitcoin in particular as a buying frenzy sent its value surging to almost $20,000 (£14,542) before Christmas. The seesaw currency then slumped back to $6000 in January before recovering slowly, adding $62 to $10,902 today.

Carney, speaking at Bloomberg’s offices in London, said cryptocurrencies were “proving poor short-term stores of value”, labelling their volatility “quite a lottery”.

He said they also failed as a medium of exchange as no major retailer accepts them as payment. Their fixed supply would impose a deflationary effect on the economy akin to the previous gold standard regime linking paper money to the precious metal, if adopted widely, he added.