An official with the Bank of Canada has issued a warning about Canadians investing in crypto.
In a statement this past week by the Bank on the Financial System Review (FSR), the government cautioned about risks including fast-rising interest rates, and geopolitical challenges while touching upon newer topics such as digital assets.
Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, stated:
“… cryptoassets are a growing vulnerability. More Canadians are investing in cryptocurrencies. But the growth of these markets has outpaced global efforts to regulate them. Like other speculative assets, cryptocurrencies are vulnerable to large and sudden price declines. And recently, some stablecoins—a type of cryptocurrency—have failed to deliver on their promise of stability. While cryptoassets 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. And their risks may not be well-understood by investors. Regulators around the world and in Canada have recognized this risk and are working to address it.”
Rogers told Reuters that crypto is still small but “growing really rapidly.”
“We don’t want to wait until it gets a lot larger before we bring regulatory controls in place.”
“Like any asset that’s jumping around in price, people see an opportunity for quick gains. Our concern is they may not understand the risks. They may not even understand that it’s not a regulated area.”
An estimated 13% of Canadians hold crypto as of 2021 – up from 5% in the year prior.