Stephen Poloz, the governor of the Bank of Canada, recently stated that bitcoin trading is “gambling.” Per the central bank governor, digital currency buyers should “beware,” as cryptocurrencies aren’t neither assets nor currencies. To him, they’re more like securities.
Speaking to CNBC, Poloz added that he is currently working with global regulators to develop regulations around cryptocurrencies. Notably, he joined a group of personalities, including central bankers and Nobel laureates, claiming bitcoin has no intrinsic value. He stated:
“There is no intrinsic value for something like bitcoin so it’s not really an asset one can analyze. It’s just essentially speculative or gambling.”
According to Poloz a potential crash in the cryptocurrency markets could not have implications for the wider economy. He compared the current cryptocurrency ‘craze’ to a ‘tech wreck’ scenario. Poloz added that a tech bubble bursting didn’t have any perceptible effects on the “real economy” because it was just one of its segments.
He went on to add that if something like a ‘tech wreck’ were to happen in the cryptocurrency ecosystem, it would have smaller consequences. However, Poloz noted that he didn’t want to minimize the risk posed by cryptocurrencies, “because any mania has the scope to get much bigger.”
Poloz said that “for the purposes of consumer protection,” regulations will be developed around the cryptocurrency space. To regulators, it’s important to protect consumers, while making sure they don’t stifle innovation, he said.
Will Canada have a national cryptocurrency?
When asked about the issuance of a national cryptocurrencies, the central banker clarified that “no one is in a rush” as cash is still doing its job. He said the development of such a cryptocurrency would need to be carefully examined. The banker noted, however, that if Canada were to ever have one, it would likely not use blockchain technology.
Poloz added that a national digital currency would be backed by the Canadian dollar, and implied it would still be part of a governmental system of control. This, partly because of his rejection of blockchain technology.
“The reason that it has such appeal in the case of bitcoin is it gives you finality of settlement that eventually grinds through the distributed ledger and therefore you trust that. Whereas the central bank, if the Bank of Canada, were to issue a digital currency, well you already trust the Canadian dollar, and so you don’t need a distributed ledger in order to believe you just received final payment in your digital wallet.”
Canada is a country that’s notably becoming more cryptocurrency-friendly. KFC Canada, for example, recently launched a “Bitcoin Bucket” that can be purchased using bitcoin