The federal government of Canada has announced that it plans to examine central bank digital currencies, stablecoins and cryptocurrencies. This revelation was in the recently released mini-budget statement.
Deputy PM Chrystia Freeland released the 2022 Fall Economic Statement, which serves as an update on fiscal policy during a given budget year. That statement contained a section focused on laying out what plans the federal government has for the crypto industry. The government revealed in the statement that it needed to keep pace with the different ways in which the digitalization of money as well as cryptos were transforming Canada’s financial system as well as systems globally.
The government expressed concerns about the ability of cryptos and digital currencies to pose threats to democracy globally. The examples given in the statement for this assertion included the use of cryptos to work-around sanctions as well as being used to fund illegal activities within and outside Canada.
The government statement then indicated that consultations would commence with different stakeholders on CBDCs, cryptos and stablecoins. It wasn’t immediately clear what exactly the government wanted to consult about or with whom. However, it is broadly believed that those consultations are in line with the federal government’s initiation of a review process aimed at updating the financial sector laws and regulations, particularly in connection to recent realities of digitalizing money.
The consultations will most likely also explore the possible need of a central bank digital currency (CBDC) to combat the threats posed by cryptos and other digital forms of assets.
There is some context to the Canadian government’s concerns about cryptos and other such assets. Back in January, massive protests broke out in Ottawa against COVID-19 restrictions as well as the mandate to vaccinate everyone of age. The protestors were stopped from using platforms that facilitate the collection of fiat currency donations. This was in a bid to starve the protests of the funding needed to keep the protests going, but organizers switched to crypto platforms and collected nearly a $1 million crypto donations before the police wrote letters asking crypto exchanges to deactivate the accounts on which those donations were being channeled.
Given this background, it is likely that players in the global blockchain ecosystem such as Riot Blockchain Inc. (NASDAQ: RIOT) will be following events in Canada closely to see whether the country’s plans to regulate the industry take a draconian approach or more progressive stance on digital assets such as cryptos.
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