Crypto’s rapid growth pushed Canada to speed up regulations

The Canadian government will begin consultations on cryptocurrencies, stablecoins and CBDCs.

The governing body maintained that such assets should operate under strict supervision since they could facilitate illegal operations and pose “a challenge to democratic institutions.”

Crypto is among the budget’s priorities

As revealed in its 2022 mini-budget, Canada’s federal government will aim to introduce regulations for the local cryptocurrency sector. The officials started a series of consultations with shareholders to discuss the pros and cons of digital assets, stablecoins and CBDCs.

Canada’s authorities claimed that this is an important step since the digitization of money has transformed the global financial system. They also believe that cryptocurrencies can fuel criminal activities and are used by criminals to circumvent sanctions:

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

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

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

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

Bank of Canada’s stance

The central bank of the North American country has called on the government to enforce rules for the industry several times.

Senior Deputy Governor Carolyn Rogers said in June that the step must be completed as soon as possible as the asset class is developing and attracting more investors. In her view, some individuals are unaware that they can lose their entire investment when they enter the ecosystem.

“This is an area that is still small, but it is growing very quickly. We don’t want to wait until it gets much bigger before we put regulatory controls in place,” she warned.

The Bank of Canada estimated that approximately 13% of the nation’s adults were HODLers (as of late 2021), while 90% of the population knew of bitcoin’s existence.

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