‘Bitcoin is not a digital currency; people don’t spend it’

Bank of Canada Governor Tiff Macklem has reaffirmed his view that Bitcoin should not be categorized as a currency because it lacks attributes to be used in transactions.

While speaking with CTV news, the governor reiterated his skeptical stance on the digital asset. He noted that Bitcoin is not relevant for daily transactions even as countries like El Salvador have legalized the flagship cryptocurrency as a legal tender.

Despite his anti-Bitcoin stance, many investors have continued to adopt Bitcoin as a payment option. However, Macklem believes that the current system of banknotes would persist, though he acknowledged that the pandemic helped facilitate the shift to digital transactions. He stated:

Let me be clear, Bitcoin is not a digital currency. People do not use Bitcoin to buy things…We have banknotes, and we’re going to have banknotes, at least for the whole time that I’m Governor; they are not going away. At the same time, we know our economy is becoming more digital, and the pandemic has accelerated that.”

Macklem had stated in a previous interview that no digital asset qualifies to be considered a currency despite the existence of several cryptocurrencies, suggesting that they be referred to as crypto assets. He maintained that there is a need for international cooperation before the cryptocurrency sector can be streamlined to supports wide scale transactions.

The exec also confirmed that the country’s finance ministry is deciding on a possible Canadian central bank-issued digital currency, and the institution has invested in the research for the potential development of a CBDC.

According to a report issued by the central bank, a digital currency is necessary when you consider the stiff competition among payment service providers and digital innovation. The report also acknowledged that the key motivators for the proposed shift are the diminishing use of cash and the role of a CBDC as a countermeasure to the rise in alternative digital currencies.

The Financial Posts also reported that the bank had no intention of launching a CBDC soon. However, this position might change if physical cash usage continues to decline.

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