In an October 19 interview on CNBC, Royal Bank of Canada (RBC) CEO David McKay claimed that cryptocurrency’s main function is currently to “move money in a hidden way,” a role that positions the technology, which he described as a regulatory “backdoor,” to “potentially facilitate criminal activity.” He suggested that cryptocurrency transactions should be monitored to bolster anti-money laundering efforts and interfere with terrorist financing.
While he does not consider the cryptocurrency bitcoin to be fraudulent, he opined that it “doesn’t solve a main need in society right now,” though he said that a mainstream use case for the technology might eventually emerge. The advantage of fiat currency, he explained, is that its holder is reassured of its value by the stability of the government that issued it, by the strength of that nation’s economy, and by the fact that a central bank holds quantities of it in reserves. According to this schema, he conceded that citizens of Venezuela might have legitimate cause for determining that cryptocurrency represents a “better balance of risk … than holding a promissory note.”
Though skeptical of cryptocurrency, he appeared significantly more optimistic about the blockchain technology that undergirds it, suggesting that it could someday “transform everything from our capital markets and our trading businesses, our security settlement businesses, right into our retail franchise.”
The RBC has maintained a recent presence in the blockchain space. In 2016, it participated in experiments with CAD-coin, a Canadian fiat digital currency. The bank is also slated to take part in a trial spearheaded by identity and authentication provider SecureKey to build a blockchain-based identity network. It’s also a member of the R3 banking consortium and Payments Canada, both of which participated in Project Jasper, a pilot program aimed at establishing a blockchain-based securities settlement system.