The number of Canadians who own digital assets is growing fast, and, therefore, the regulation for this nascent industry must maintain the pace, according to a senior Bank of Canada Official.
Crypto Industry is Small, But It is Growing Fast, and Needs Urgent Legislation
In Canada, many people might understand the risks associated with crypto assets like Bitcoin. The issue is becoming more dire than any other moment in the past as digital assets get integrated into the mainstream financial system. This can result in serious risks, such as the recent crypto crash that followed the collapse of the Terra ecosystem.
According to Carolyn Rogers, the senior deputy governor of the Bank of Canada, this area is still small, but it is growing rapidly and is not regulated. “We don’t want to wait until it gets a lot larger before we bring regulatory controls in place,” added Rogers.
The value of the global crypto market grew from about USD200 billion around early 2020 to about USD3 trillion when it hit a peak, according to the Bank of Canada report released last week. Between 2020 and 2021, the number of Canadians who own Bitcoin (BTC) more than doubled from 5% to 13%.
“Like any asset that’s jumping around in price, people see an opportunity for quick gains,” explained Rogers. “Our concern is that they may not understand the risks. They may not even understand that it’s not a regulated area,” she added.
Crypto assets’ prices dropped randomly in recent months as people increased their appetite for high-risk assets. This exposed investors to significant financial losses. The industry requires regulation, but Rogers appreciates the challenge of sorting how it will be done.
“These are somewhat like banking assets, somewhat like capital markets,” she said. “One of the challenges is to figure out how they fit in the current regime, and if they don’t fit, how do we adjust the regime so that they will fit,” she expressed.