The recent crash in the crypto sector has caught the attention of global authorities. Several regulatory agencies are sitting up on the issues of crypto regulation.
According to the Bank of Canada, urgent regulation is needed in the crypto sector. It added that:
“The sector is growing and might affect the overall financial market if a meltdown occurs.”
Need For Urgent Regulation
Speaking with Reuters, the Deputy Governor of Canada’s central bank, Carolyn Rogers, commented on the crypto industry. According to her, she believes it is high time the crypto sector is regulated. This is due to the influx of investors into the sector.
Rogers expressed worry that the lack of crypto regulation can affect the wider financial system. The industry is growing, and more investors are trooping in.
In addition, most new investors do not understand the instability and risk involved. Consequently, a major price drop in the sector can cause a ripple effect in other areas.
“Although the crypto industry is small, it is growing tremendously. We do not want to sit back till it get larger before regulating it. Regulations should be put in place now,” she added.
Furthermore, Rogers viewed the industry as an “unregulated area” where investors try to make “quick gains.” Most of the time, these investors have little or no knowledge about it.
The central bank carried out a survey recently. The result revealed that over 13% of people in Canada held BTC in 2021. This signified an increase of 5% from 2020.
Besides regulation, she noted that the assets had not been adequately categorized. As a result, introducing regulations has been difficult.
Rogers: Bitcoin Is Not A Solution For Inflation
Worldwide, virtually all central banks are skeptical of digital assets due to instability. While some are outrightly against it, others remain on the fence.
Meanwhile, Canada’s central bank is no different. The central bank has warned investors to be cautious of cryptocurrencies.
Yvan Baker, a Liberal MP, asked Rogers if BTC could help Canadians fight against inflation. The deputy replied that she does not recognize BTC as a remedy for inflation. Also, he noted that it does not have a stable value.
However, Rogers admitted that the crypto space had witnessed some great innovations recently. Hence, it appears the Bank of Canada has a neutral stance toward digital currencies.
Although the central bank is not pro-crypto, it agrees with developing a CBDC. It is currently in the developmental stages.
In March, the central bank partnered with MIT (Massachusetts Institute of Technology) on a research project. The project aims to explore a possible design for a CBDC. Also, it will evaluate the effects of a CBDC on the country’s financial system.
