Bitcoin is still a gamble to Canada’s central bank chief, but he looks to ‎coordinate efforts with global regulators to form policies and develop rules ‎around the digital coins.‎

Bank of Canada Governor Stephen Poloz told CNBC on Thursday that ‎currencies must act as a reliable store of value and should be able to be ‎easily spent.

“They are crypto but they are not currencies,” Poloz said in an interview at The Sanctuary in Davos.‎

Poloz acknowledged demand for crypto assets could grow over time and ‎policy makers are studying whether a case could be made for central banks ‎to provide it. However, he did not delve into specifics of the kind of collaboration or ‎policies that the BoC is pushing for.‎

‎”I’m not really sure what they are. They are not assets really … I suppose ‎they are securities technically … There is no intrinsic value for something ‎like bitcoin so it’s not really an asset one can analyze. It’s just essentially ‎speculative or gambling.”‎

Poloz added the Canadian regulator’s experiments with blockchain technology ‎suggest it doesn’t have “substantial advantages” over the current technology ‎for payment systems.‎

This increase in regulatory efforts should help protect Canadian consumers from ‎exploitation inspiring a more trustworthy ecosystem. On the other hand, this ‎can restrain innovation‏.‏ But most importantly, it also mean ventures and investors ‎must proceed more cautiously on what kinds of crypto activities they perform ‎or participate in.

‎”One parallel we could draw would be the tech wreck. When we had the ‎tech wreck, that was a much more widespread exposure. And the fact it had ‎barely had perceptible effect on the real economy because it was not a ‎stock market crash but just a segment of the stock market. But it was highly ‎speculative, there was all kinds of bubbles there,” Poloz explained.‎

The central bank’s boss reiterated the concerns conveyed in the earlier ‎‎warnings that came in the wake of significant spurt in the valuation of bitcoin ‎and rapid ‎growth in related fundraisers, or Initial Coin Offerings (ICOs). He ‎highlighted the potential economic, ‎financial, legal, customer protection and ‎security related risks ‎associated with such unregulated tender, adding he ‎hopes the ‎system will treat bitcoin cautiously.‎

Canada is seen as a ripe ground for blockchain technology applications, ‎including cryptocurrencies, partially due to its ‎tech-savvy population. The ‎subcontinent is also ripe for an institutional-level ‎adoption as the country’s ‎investors may soon get access to the burgeoning market through exchange-‎listed products that track the price ‎performance of bitcoin‏.‏

Crypto regulations in Canada

In the last few months, several providers of listed products have filed ‎preliminary prospectus with provincial authorities for the launch of an ‎actively managed bitcoin ETF‏.‏‎ During the process, ‎the British Columbia ‎Securities Commission (BCSC) has granted blockchain startup First Block ‎Capital Inc. its official registration as an investment fund manager, which ‎allows the firm to operate a Bitcoin investment fund.‎

The race to roll out crypto derivatives was heightened by the launch of ‎bitcoin futures in the U.S. earlier this month. This approach, which ‎essentially taps ‎into the futures market rather than risks associated with ‎bitcoin’s underlying markets, would help ease retail investors’ exposure, ‎which remains a regulatory nightmare for many jurisdictions.‎

Nevertheless, the anticipated regulatory approvals will adopt a cautious ‎approach where they could allow bitcoin derivatives to work ‎under the ‎current ‎regulatory framework while providing the regulators with unique ‎‎mechanisms to monitor the ‎operations closely. ‎

The Canadian Securities Administrators (CSA), comprised of the country’s ‎thirteen key financial market regulators across their respective provinces, ‎has also publicized plans to regulate digital token sales.‎

The CSA stated that this new fundraising phenomenon should be ‎categorised as securities, at least in some cases. This implies that certain ‎ICOs/ITOs would now need to follow Canadian securities laws, which ‎requires assessing the economic realities of the offering to protect ‎participating investors.‎