By George Ward
On Monday, Canada’s apex bank published its perspective on stablecoins (cryptos that can be redeemed 1:1 with fiat currency). On-chain data shows a massive increase in the international market for these stable cryptocurrencies, indicating a 30-fold growth rate between the start of 2022 to mid-2022, amounting to $161 billion.
According to the data, stablecoins are used mainly on trading platforms. However, they can potentially be deployed for several other use cases, including smart contracts.
The Numerous Benefits Of Crypto Assets
Meanwhile, the Bank of Canada researchers outlined the numerous benefits of crypto assets. For example, they note that cryptos could bring about development and a heightened sense of competition among payment services, specifically for a digitized ecosystem.
However, the authors added that without adequate safety measures in place, there would be a significant amount of risk destabilizing the broader financial ecosystems. Therefore, the report emphasized the need to identify risk factors.
However, some risks pertain to stablecoins and their holders. Currently, stablecoins are ranked among the top three and account for 90% of their crypto market share.
The increased level of holdings reinforces the potential of stablecoins, which holders could also hugely impact the economy. On-chain data shows that 1% of the top-rated investors own a fair amount of the top stablecoins.
Stablecoin Regulations
While there are established regulatory policies from global regulatory agencies regarding fiat-pegged crypto assets, they serve as guidance for other state regulatory bodies.
Given Canada’s current crypto regulations, the note comes in very handy. Recall that in February, the Canadian House of Commons adopted a bill that fosters the growth of the crypto asset sector.
Interestingly, the bill was greatly supported by Canada’s crypto community but created a political division. Hence, it was later ignored. Time will tell whether Canada’s lawmakers will adopt some of the suggestions in this central bank note.
Despite having a crypto regulatory policy, Canada is also updating its policies regularly to suit the changing dynamic in the crypto ecosystem.