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News- Cryptocurrency is not developing in such a way that creates economic risk, as per the Bank of Canada
- Canadian central bank believes that digital assets like Bitcoin do not play much of a role in payments
- Bank of Canada thinks that stablecoins could potentially play a more significant role in payments
Cryptocurrency ecosystem has seen growth and shown its potential to the world over the last few years. Since the beginning of this year, the crypto market has witnessed enormous growth in terms of price, adoption, and value. Following such massive gains, the entire industry was able to garner mainstream attention. However, financial regulators globally are also eyeing the industry and researching what economic risks such an ecosystem poses. Recently, an official from the Bank of Canada underscored that digital assets do not pose any significant threat to our traditional financial world at the current level of adoption.
Cryptocurrency is no risk to economic stability
Paul Beaudry, the deputy governor of the Bank of Canada, has recently spoken about the risks possessed by Cryptocurrency at the Ontario Securities Commission Dialogue 2021. On Tuesday, Beaudry was asked whether digital assets are a risk to the Canadian financial infrastructure. In response, the deputy governor highlighted that the Bank of Canada does not think that such assets are developing to create a systematic type of risk to finance.
Furthermore, Beaudry also explained that virtual currencies are pretty removed from a financial system. However, as the digital currency market grows more prominent with more individuals investing in it, crypto becomes more of a rusk that can bring a certain level of vulnerability. Although the Canadian central bank does not yet think of such assets as a risk, it has closely kept an eye.
Bitcoin has no role in payments
Canada is one of the first nations that approve a Bitcoin-based exchange-traded product. Moreover, currently, the nation is the fourth-largest hash rate contributor to the global crypto mining industry. However, the Canadian central bank believes that digital assets like Bitcoin do not play much of a role in payments. According to Beaudry, the investors of the assets buy BTC to speculate.
However, the Bank of Canada has also noted that few crypto-like stablecoins are pegged with government-issued fiat. Indeed, Beaudry believes that such stable crypto tokens could potentially play a more prominent role in payments. Hence, the bank has also kept its eye on stablecoins.
Is Canada a crypto-friendly nation?
It is observed that Canada emerges as one of the most crypto-friendly nations. Many investors and traders have deemed that the nation is one of the popular spots for cryptocurrency miners. According to data from the Cambridge Bitcoin Electricity Consumption Index as of Q3 2021, Canada ranks the fourth largest nation in terms of hash rate.
Although Canada takes progressive measures in terms of crypto development and adoption, the nation’s central bank expressed some skepticism regarding such assets. Earlier this year, the Bank of Canada wrote that price volatility stemming from speculative demand remains an essential obstacle to the wide acceptance of digital currency as a means of payment. Simultaneously, Beaudry also noted that crypto assets are being bought to speculate.
