Following the Canadian government’s failure to contemplate the legislation, experts from a central bank have written a letter stating that regulation is necessary to take advantage of fiat-referenced cryptocurrency assets.

On Dec. 19, Bank of Canada staff members released an analytical report on stablecoins, often known as fiat-referenced cryptocurrency assets.

In addition to a discussion of the processes that can be used to create and distribute stablecoins, as well as a summary of the potential dangers and advantages associated with their use, the letter writers expressed support for further regulation of the cryptocurrency asset.

Between early 2020 and mid-2022, the global market for fiat-based crypto assets grew 30-fold, reaching a total value of $161 billion in US dollars.

According to the note, its main use is on platforms that facilitate cryptocurrency trading; but they can also have a wide range of other applications, particularly when combined with smart contracts.

Especially in an economy that is becoming increasingly digitized, the introduction of these crypto assets could bring greater levels of efficiency and competitiveness to the payment services industry. On the other hand, in the absence of protections, they can present substantial threats to the integrity of the financial system.

Due to the high concentration of these currencies and headlines, any changes that happen to them could have a disproportionately large effect on the economy as a whole.

According to the document, despite the fact that international standard-setting groups have provided advice on the regulation of fiat-referenced crypto assets, most current regulatory systems, in Canada and abroad, are currently not fit for purpose. .

The message was probably most fascinating when seen in light of the current regulatory climate around cryptocurrencies in Canada.

In February, the Encouraging Growth of the Crypto Assets Sector Act, also known as Bill C-249, was introduced in the Canadian House of Commons.

The crypto community in Canada generally agreed with the move, but it ended up being politically controversial and was eventually ended after its second reading.