(Kitco News) – The debate on regulations in the cryptocurrency space continues to heat up. Canadian market leaders say that more rules are needed if consumer adoption of digital currencies continues to grow.
According to a panel discussion during the 2021 Fintech & Financing Conference and Expo (FFCON21), the COVID-19 pandemic has forced consumers to embrace a digital lifestyle, leading to the explosive growth of cryptocurrencies like bitcoin.
However, the participants also noted that although digital currencies like bitcoin are becoming accepted as mainstream assets within financial markets, consumer adoption is still in its infancy with significant untapped potential.
Alice Davidson, vice president and general counsel at MOGO, said that consumers and investors have become a lot more familiar with digital currencies as an investment class in the last few years, and the market is no longer a “mystical multiverse.” However, she added that consumer adoption is still pretty low.
Davidson added that the key to further consumer adoption is through regulation. Regulation will lead to more consumer protection, creating more confidence in the marketplace, she said.
“I think regulations are necessary,” she said. “After all, we are talking about money in one form, or another and consumers need protection.”
Ryan Wang, founding partner at Outpost Capital, added that proper regulations could spur innovation in the crypto marketplace as everyone will be playing by the same rules. A lot of focus is on Canadian regulations within the crypto space. Canada was the first country to launch a bitcoin exchange-traded fund.
Jason Butcher, chief executive officer at CoinPayments, also agreed that more regulations are needed. He noted that bitcoin has grown as a critical digital asset because the sector has received support from regulators.
“We are seeing support from regulators for efficiencies and to make sure people are a lot more protected,” he said. “I believe that has a lot to do with how we are seeing massive adoption in the usage of cryptocurrencies. The banks wouldn’t be in the position they are in today in supporting cryptocurrencies if there weren’t the regulators.”
In a recent report, CoinPayments highlighted unprecedented growth in transaction value in cryptocurrencies worldwide. The company noted that Europe remains the largest regional market and is 1.5 times bigger than North American.
The company said that regulation had played an essential role in Europe’s dominance in digital currencies.
“Global regulations enabling crypto payments have come a long way, particularly in Europe,” Butcher said in the report. “That’s why our data shows that our European users are using cryptocurrencies to conduct business more than in North America.”
As to what the digital currency market will look like in the next five years, Butcher said that as regulations advance, he could see nations and governments adopting global payment systems based on stable coin technology.
“Over the next five years, we are going to see more [Central Bank Digital Currencies] and national bank currencies that are digitally based,” he said.
The panel has a similar outlook to the newly minted Securities and Exchange Commission Chairman Gary Gensler. Last week in testimony before the House Financial Services Committee, Gensler said that the cryptocurrency market could benefit from regulations.
“Right now, the exchanges trading in these crypto-assets do not have a regulatory framework either at the SEC or CFTC. There is no market regulator, and thus there is really no protection against fraud or manipulation,” he said.
“If one trades bitcoin in America today, there is no investor protection regime that really protects as I think would be appropriate around these exchanges,” he added. “There are things that we can do better and get done at the SEC. But I also look forward to working with Congress if there is the desire to fill some gaps. As I said earlier, [those being] crypto exchanges.”
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