The
actual bank report isn't at all alarmist like the scare headline the guardian wrote, it mainly concentrates on long term problems of decentralized cryptocurrencies like how they believe transaction fees are not sustainable therefore widespread adoption is unlikely. Their main concern is the rise of fractional reserve banking and derivatives being tied to cryptocurrencies, so if somebody gets a million bitcoins and then starts lending fiat in a fractional reserve unregulated fashion against those coins there will obviously be problems. They also worry about a fragmentation of the UK economy if a big enough group of businesses and individuals decide to entirely transact without inflated paper IOUs.
There's also the issue of backdoor nation state manipulation of central bank currencies should future BTC->sterling trading be large enough. This is China's and Russia's main concern with Bitcoin, that the CIA will dump billions into bitcoin to trade against their currencies to fracture and manipulate their economies hence why direct Ruble/Renminbi trading is discouraged but they don't care if you trade Bitcoin for any other currency.
