Central Bank of Canada: “government cryptocurrencies have more risks than benefits”

Bank of Canada experts believe that government cryptocurrencies carry more risks than benefits. The regulator is exploring the possibilities for the safe storage of such digital assets.

According to a report by the Central Bank of Canada, the use of government digital currencies will pose a threat to the safety of users “at every step”: when storing funds, making transactions and using electronic wallets. 

In addition, digital currencies from the Central Bank will intensify competition between cryptocurrency exchanges and conventional banks, which will begin to fight for user preferences. The Bank of Canada experts believe that if the holders of government stablecoins can store them in different wallets, then the funds will be “scattered” between third-party service providers operating in other jurisdictions. This will greatly complicate regulation.

A particular risk is posed by platforms that in the future will start working with state cryptocurrencies and will offer users appropriate solutions. There are fears that the owners of such platforms may turn out to be scammers, or the sites may be subjected to hacker attacks due to vulnerabilities in the code. There is also the possibility that users will simply forget or lose their private keys.  

Researchers have proposed limiting the number of government stablecoins that can be deposited on cryptocurrency platforms or wallets. It is also necessary to draw up a list of requirements for virtual asset service providers (VASP) who wish to interact with cryptocurrencies from the Central Bank. 

According to analysts, it makes sense to establish responsibility for the loss of government stablecoins, as is the case with ordinary money, but this idea will not be easy to implement. Experts came to the conclusion that before issuing such a digital asset, it is necessary to carefully study the issues related to the safe storage of funds, as well as analyze the possible consequences of the launch of such a digital currency.

Earlier, Deputy Chairman of the Bank of Canada Timothy Lane said that it is not yet time for the release of the state cryptocurrency, and Canadian citizens will continue to use the current payment system, which can be modernized if necessary.

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