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During November, several central banks addressed bitcoin and cryptocurrencies. New Zealandâs central bank has issued a statement seeking to educate citizens of the fundamentals underpinning cryptocurrencies, as well as the implications of such on monetary policy. The senior deputy governor of the Bank of Canada has stated that cryptocurrencies comprise assets or securities, rather than currencies. Brazilâs central bank also addressed cryptocurrencies during November, issuing a warning to investors.
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Reserve Bank of New Zealand Does Not Believe Cryptocurrencies Pose Existential Threat to Mainstream Financial Institutions
The Reserve Bank of New Zealand (RBNZ) has published a paper on cryptocurrencies titled âCrypto-currencies â An introduction to not-so-funny moneys.â The 44-page document seeks to âincrease public understanding these technologies, highlight some of the risks involved in using crypto-currencies, and discuss some of the potential implications of these technologies for consumers, financial systems, monetary policy, and financial regulation.â The document also details the fundamental underpinnings and history of cryptocurrency, and provides definitions for terminologies relevant to the industry.
The document states that âCrypto-currencies expand the mechanisms by which people can transact with each other, strengthening competitive pressures on payment systems providers.â Despite such, the RBNZ states that due to the ârelatively small volume of transactionsâ conducted using cryptocurrencies, âThese new payment mechanisms are unlikely to completely supplant traditional payment systems.â The document also emphasizes the âincompatab[ility] of âthe (pseudo) anonymity⊠of crypto-currencyâ with credit issuance â concluding that such prevents cryptocurrencies from posing a threat to many functions of traditional financial institutions.
Canada Views Cryptocurrencies as Assets or Securities, Not Currency
Earlier this month, Bank of Canadaâs senior deputy governor, Carolyn Wilkins, stated that âso-called cryptocurrencies actually arenât currencies at all, theyâre not money.â Speaking with Bloomberg, Mrs. Wilkins stated âIf you look at standard monetary theory⊠this is really an asset, or a security. And so it should be treated that way, and in fact, thatâs the way itâs treated in Canada.â
When asked specifically of ICOâs Mrs. Wilkins stated âIâm not a securities regulator, and itâs not the Bank of Canadaâs role to comment on any specific ICO, but⊠these look more like securities to me than a currency and they should be regulated as such.â
Mrs. Wilkins also expressed enthusiasm for blockchain technology, adding âWhat is promising⊠is⊠the distributed ledger technology that underpins it, because it provides the opportunities to create efficiencies in financial markets and other places that could actually be beneficial to market participants, businesses, and households.â
The Banco Central Do Brazil Issues âAlert on [the] Risks Arising From Custody and Trading Operations of So-Called Virtual Currenciesâ
The warning emphasizes the lack of protections afforded to investors choosing to trade cryptocurrencies, stating that virtual currencies âare not issued or guaranteed by any monetary authority.â Brazilâs central bank states that âthe purchase and safekeeping of virtual currenciesâ exposes investors to âimponderable risks, including⊠the possibility of loss of all capital invested.â
Despite the dire tone of the warning, the document states that âthe need to regulate [cryptocurrencies] has not been identified to date by international organizationsâ, adding that âIn Brazil, for the time being, no significant risks are observed for the National Financial System.â
What do you make of the central banksâ statements regarding crypto? Share your thoughts in the comments section below!
Images courtesy of Shutterstock, Bank of Canada
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The post Brazil & New Zealand Issue Statements, Cryptos are Assets or Securities in Canada appeared first on Bitcoin News.
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