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Crypto regulation efforts need to keep pace with market growth -Bank of Canada official

Economic Indicators Jun 10, 2022 09:26AM ET
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© Reuters. FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration

By Julie Gordon

OTTAWA (Reuters) - The number of Canadians who own cryptoassets is growing rapidly and efforts to regulate the sector need to start keeping pace, a senior Bank of Canada official said, noting many people may not understand the risk of investing in products like bitcoin.

The issue is growing more pressing as cryptoassets become integrated into Canada's financial system, increasing the risk that crypto shocks - like the recent price plunge - could end up hitting the broader financial system.

"This is an area that is still small, but it's growing really rapidly. And it is largely unregulated," Bank of Canada Senior Deputy Governor Carolyn Rogers (NYSE:ROG) told Reuters in an interview on Thursday. "We don't want to wait until it gets a lot larger before we bring regulatory controls in place."

The value of the global cryptoasset market soared from $200 billion in early 2020 to $3 trillion at its peak, the Bank of Canada said in a report this week. The share of Canadians who own bitcoin more than doubled to 13% in 2021 from 5% in 2020.

"Like any asset that's jumping around in price, people see an opportunity for quick gains," said Rogers. "Our concern is they may not understand the risks. They may not even understand that it's not a regulated area."

Indeed, cryptocurrency prices plunged in recent months as appetites for high-risk assets soured, exposing some investors to significant financial losses.

The industry needs to be regulated, said Rogers, but the challenge is sorting out just how that will be done.

"These are somewhat like banking assets, somewhat like capital markets," she said. "One of the challenges is to figure out how do they fit in the current regime, and if they don't fit, how do we adjust the regime so that they will fit."

Crypto regulation efforts need to keep pace with market growth -Bank of Canada official
 

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Comments (2)
me ish
me ish Jun 10, 2022 10:53AM ET
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"a senior Bank of Canada official said, noting many people may not understand the risk of investing in products like bitcoin." - or for that matter keeping their wealth/savings in fiat currencies that are being inflated out of existence!!! At least with Bitcoin, you know in advance how much of the stuff will ever be in existence - by design - you can't even say that about gold or silver
me ish
me ish Jun 10, 2022 10:53AM ET
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Over the last ten years, how well has BTC done against the US or Canadian dollar???
me ish
me ish Jun 10, 2022 10:35AM ET
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investors are rapidly losing faith in fiat money - and with crypto now down in many cases 95% from last year's highs, folk are piling back in again - it will be hilarious to see doge or shiba inu have more credibility than the US or Canadian dollar.
 
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