Rapid growth in Crypto prompted Canada to speed up regulations

The Canadian government will launch consultations on cryptocurrencies, stablecoins, and central bank digital currencies.

The board argued that such assets should operate under strict supervision because they could facilitate illegal operations and pose a “challenge to democratic institutions”.

Cryptocurrency is among the budget priorities

As revealed in its 2022 mini-budget, the Canadian federal government will seek to introduce regulations for the domestic crypto sector. Officials launched a series of consultations with shareholders to discuss the pros and cons of digital assets, stablecoins, and central bank digital currencies.

Canadian authorities have argued that this is an important step because the digitization of money has transformed the global financial system. They also believe that cryptocurrency can fuel criminal activities and criminals use it to get around penalties:

“In recent months, digital assets and cryptocurrencies have been used to evade global sanctions and fund illegal activities, both in Canada and around the world.

To help address these challenges in Canada, the 2022 budget announced the government’s intent to launch a regulatory review of the financial sector focused on digitizing money and maintaining financial sector stability and security.”

Several politicians and financial experts have warned that Russia may use digital currencies to get around some sanctions imposed by the West after Putin launched his “special military operation” in Ukraine.

On the contrary, Changpeng Zhao – CEO of the world’s largest cryptocurrency exchange – Binance – believes that bitcoin and altcoins are not a suitable option to avoid financial fees. The CEO argued that the asset class is highly traceable due to the underlying blockchain technology, and governments around the world can easily detect such transactions.

The position of the Bank of Canada

The North American nation’s central bank has called on the government to impose regulations on the industry several times.

Deputy Governor Carolyn Rogers said in June that the move should be completed as soon as possible as the asset class develops and attracts more investors. In her view, some individuals do not realize that they can lose their entire investment upon entering the ecosystem.

This is an area that is still small, but it is growing very fast. “We don’t want to wait for it to get much bigger before we introduce regulatory controls,” she warned.

The Bank of Canada estimated that about 13% of adults in the country were HODLers (by the end of 2021), while 90% of the population knew of the existence of Bitcoin.

The institution’s study determined that BTC is most attractive to those with low financial knowledge. Investors with sufficient financial knowledge are the second most likely demographic to own the underlying cryptocurrency.

It prompted rapid growth in Crypto after it prompted Canada to speed up regulations for the first time on CryptoPotato.

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