Bank of Canada senior official calls for regulations to match digital assets growth

Carolyn Rogers, the senior deputy governor of the Bank of Canada, has highlighted the central bank’s thoughts on digital assets, noting that regulations need to catch up with the rapid growth of the industry. 

In an interview with Reuters, Rogers maintained that the digital assets industry is still relatively small. However, the central bank will not wait for it to get bigger before implementing regulations.

“This is an area that is still small, but it’s growing really rapidly. And it is largely unregulated. We don’t want to wait until it gets a lot larger before we bring regulatory controls in place,” she said. 

However, she explains that there are major challenges in providing these regulations. For one, digital assets do not fit into any category as some are like banking assets while others are related to the capital markets. 

Her statements follow the release of the Bank of Canada Financial Stability Review (FSR) last week that classified digital assets as a “growing vulnerability.” In the report, Rogers also maintained that investors and regulators do not fully understand the risks associated with digital assets. 

“While crypto-assets do not yet pose a systemic risk to the Canadian financial system, the lack of regulation means they don’t have the safeguards that exist for more traditional assets,” she added.

The FSR report also classifies state-sponsored cyber attacks and the need for transitioning to a low-carbon economy in the same category as digital assets. 

Meanwhile, a recent study on Bitcoin adoption also supports the Bank of Canada’s concern. The study showed that Canadians who own Bitcoin more than doubled to 13% in 2021 from 5% in 2020. 

Digital assets adoption in Canada 

Digital assets, especially BTC, have attained some level of notoriety in Canada. BTC became a center of attention after truckers protesting a proposed COVID-19 vaccination mandate sustained their protest with donations made in the pioneer digital asset by the community.

While the BTC donations did not entirely prevent the government from cracking down on the protesters, they put digital assets on the radar of regulators. The period saw the government take action against several digital assets exchanges, including Binance. 

However, Canada is still open to the digital assets industry. A bill introduced by a member of the Canadian parliament, Michelle Rempel Garner, urges the government to encourage the growth of the digital currency sector as they hold “significant economic and innovative potential for Canada.” 

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