The Bank Of Canada Asserts That Cryptocurrencies Do Not Currently Pose Significant Economic Risks

According to the Bank of Canada, cryptos do not represent a significant systemic danger to the economy since they remain on the periphery of the financial system. This is in contrast to their neighbours, the United States, which views cryptocurrency as a source of financial upheaval.

On Tuesday, Paul Beaudry, deputy governor of the Bank of Canada, discussed the low-risk aspect of cryptocurrencies during a Q & A session at the Ontario Securities Dialogue 2021. In his address, the bank official summarised the tremendous progress achieved by the country’s economy since the COVID-19 outbreak. He attributes the economy’s success to a solid regulatory environment, well-capitalized financial institutions, and exceptional government backing.

Despite these developments, Beaudry points out some hazards that might result in economic imbalances, but cryptocurrency is not one of them. He said that core cryptos are not utilised for payment reasons but are instead mostly used for speculation by investors.

“We believe it is not developing in a manner that poses a systemic danger to our financial system,” Beaudry said. “Stablecoins have the potential to play a larger role in payments, which is something we’re also monitoring.” He continues by stating that the Bank regards crypto assets in two ways: those that are self-contained, such as Bitcoin, and those that are backed, such as stablecoins.

Canada is seen as a liberal country when it comes to bitcoin legislation. The nation boasts the distinction of being the first country in North America to create a Bitcoin ETF, paving the way for the United States to follow suit. Following China’s cryptocurrency crackdown, Canada opened its borders to miners and has climbed to become the fourth biggest source of Bitcoin hash rates.

Not Every Situation Is A Bed Of Roses

While Canada is often seen as progressive, this has not always been the case, since the nation has historically viewed the asset class with suspicion. The country’s central bank said in May that the asset class is dangerous for investors but made no more remarks on restricting its development.

“Price volatility caused by speculative demand continues to be a significant impediment to the widespread adoption of crypto assets as a method of payment,” the bank said.

Binance has stated that it would cease operations in Ontario due to looming fines from the Ontario Securities Commission. Previously, the OSC has filed Statements of Allegations against Bybit, Poloniex, and KuCoin for alleged regulatory violations.

Also Read: Bitcoin Is Too Volatile To Be Used As Legal Money, According To The Governor Of The Bank Of England