The Bank of Canada’s deputy governor proposed regulating the crypto business before it becomes too massive to ignore.
Recent cryptocurrency price drops have scared world authorities about Terra’s environment. The Central Bank of Canada stressed the need of establishing such controls before the sector becomes so huge that it could bring down the whole financial market.
Carolyn Rogers, Bank of Canada Senior Deputy Governor, told Reuters that the market needs to be regulated as more people participate in the asset class.
She concerned that as the business keeps growing and attracts new investors who may not comprehend the risk, a sudden price drop could affect the broader financial system.
- “This is an area that is still small, but it’s growing really rapidly. We don’t want to wait until it gets a lot larger before we bring regulatory controls in place.”
The Deputy Governor described the industry as a “mostly unregulated field” where investors sought “quick returns” without having a broad understanding of the industry. According to a recent survey performed by the bank, 13 percent of Canadians will possess Bitcoin in 2021, up from 5% the previous year.
Despite the importance of enacting suitable legislation, she noted that identifying and supervising the asset class under the current regulatory framework is tough.
- “These are somewhat like banking assets, somewhat like capital markets,” she said. “One of the challenges is to figure out how do they fit in the current regime, and if they don’t fit, how do we adjust the regime so that they will fit.”
