Stephen Poloz, the governor of the Bank of Canada, has labelled the Bitcoin trading industry as “gambling” in a recent television interview with CNBC. Mr Poloz said that he was keen to work with global regulators to improve regulations around the cryptocurrency sector. Poloz was quizzed on Bitcoin at The Sanctuary in Davos during the recent World Economic Forum and he urged buyers of crypto assets to “beware”.
Poloz’ decision to liken cryptocurrency trading to gambling is somewhat ironic given that Canada has somewhat grey regulations regarding its own online gambling industry. Real-money online bingo is hugely popular in Canada, with 60-ball, 5-ball and 90-ball games all drawing in the crowds alongside online slots and traditional casino table games.
Nevertheless, Poloz took umbrage with the insinuation that Bitcoin was considered a currency. He said that although “they are crypto”, they “are not currencies”. When asked what they were instead, Poloz said that he believes “they are securities technically” and that there is “no intrinsic value” for cryptos like Bitcoin. Poloz’ perceived attack on the cryptocurrency space comes just months after Denmark’s central bank head, Lars Rohde labelled Bitcoin investing a “deadly” concept.
Last fall, one of the most successful financial investors of this generation, Warren Buffett, also claimed that the cryptocurrency space will “come to a bad ending” despite not knowing when or how it would happen. Poloz said that Canada’s central bank was planning to take steps to regulate cryptocurrencies in its country, “at least for the purposes of consumer protection”. Although Poloz does not appear phased by a possible cryptocurrency crash, he is keen to ensure that new regulations do “not stifle innovation” in the fintech space.
In terms of Bitcoin-related innovations that Poloz is happy to endorse, the Canadian central bank chief believes blockchain technology is a “piece of genius” and capable of being “applied to many, many areas in the [Canadian] economy”. In fact, the Bank of Canada is already forging ahead with its own blockchain-based project, which is codenamed Jasper. The project investigated how distributed ledgers could revolutionize the wholesale payments system.
Would Canada’s central bank ever endorse a cryptocurrency? Poloz’ response was somewhat lukewarm, insisting that if one were to exist it would have to be underpinned by the Canadian dollar. Although a fiat-backed cryptocurrency is on the table, Poloz said that cash continues “doing its job” and that no one is “in a rush to get this done”. Furthermore, Poloz intimated that there was a possibility that a fiat-backed Canadian dollar cryptocurrency might not be required to operate on a public blockchain due to its existing reputation and integrity.
In the event that the current bearish cryptocurrency markets were to continue throughout 2019, Poloz seemed relaxed at the prospect of a global crypto crash, believing that it would not have significant implications on the wider economy. Instead, Poloz compared a possible crypto crash to the “tech wreck” scenario. However, Poloz did admit that “any mania has the scope to get much bigger” and that damage to the cryptocurrency space must be minimized to protect consumers as much as possible.
(image credits:pixabay)
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