5 million Canadians bet on crypto. Where’s the rulebook?

Five million Canadians own crypto assets, but the country lacks a framework to make them a viable investment option in Canada's heavily regulated banking system.

A recent survey by Coinbase found that 86 per cent of Canadians want regulation of cryptocurrency, with over three-quarters believing the country's current banking system is out of touch.

In Canada, digital assets are treated as securities, stunting growth in what industry leaders are calling a missed opportunity.

In conversation at the Elevate Festival in Toronto, Ali Abou Daya, CEO at Transactix Financial, says Canada has always been a stable player in the banking market. After the 2008 financial crisis, while many key countries were "at the casino," so to speak, Canada remained stable and provided a solid foundation for external investment. He believes that while many world currencies show signs of instability, Canada has a huge opportunity to innovate into digital currencies.

"We are viewed as this boring banker that doesn't go to the casino. The world banks on Canadian stability."

Lucas Matheson, CEO of Coinbase Canada, says that Canada is competing with global leaders who have articulated defining guidelines on cryptocurrencies, paving the way for their adoption as a viable asset.

In the U.S., President Donald Trump signed the Guaranteeing Essential National Infrastructure in US-Stablecoins (GENIUS) Act into law last July. The legislation prioritises consumer protection and will ultimately strengthen the U.S. dollar's reserve currency status with a USD-backed stablecoin.

While little has been done at the federal government level to advance Canadian stablecoin infrastructure, there have been growing calls for progressive action. The grassroots advocacy organisation Stand With Crypto Canada states that over 50,000 people have enrolled in its mission to push government parties to adapt current legislation.

In 2021, Prime Minister Mark Carney, then emerging from his term as Governor of the Bank of England, expressed his belief that stablecoins should have access to a central bank's balance sheets. Still, he preferred Central Bank Digital Currency (CBDC) over privately-owned stablecoins.

Alberta has taken the helm of the stablecloin revolution. Tetra Digital Group, located in the province, is looking to launch the first regulated issuance of a CAD-backed stablecoin by the end of this year. The venture garnered investment from key Canadian players like Shopify, Wealthsimple and National Bank.

"Dubai has a framework. Singapore has a framework. Hong Kong has many frameworks that have evolved over the last few years, and Canada is doing the same. So yes, there's an opportunity to catch up," says Didier Lavallée, CEO at Tetra Digital Group. "What worries me a little bit is, yes, there's leadership at the top from the federal level...but we need clarity, and we believe some of it will come as part of the budget. But also, our financial institutions are very much behind."

Last month, the Bank of Canada stated it would look into the merits of regulating stablecoins within the country. In Canada, digital assets are controlled in partnership with the provincial and federal governments. 

"There is a pressing need for faster, cheaper, more transparent and more accessible cross-border payment services. But these services also need to be safe and secure," said Ron Morrow, the Bank of Canada's Executive Director of Payments, Supervision and Oversight, at a conference in Ottawa.

At Elevate, Daya, Matheson, and Lavallée agree that although Canada is behind, the path forward is optimistic. It's no longer about hype; it's about infrastructure demands from the private sector and constituents.

"What's happening around the world is crypto is really shifting from this retail, speculative narrative to an institutional asset class, right? Where most people are just diversifying into this asset class," says Matheson. "Now we're seeing sovereign wealth funds, government institutional investors, and literally hundreds of millions of people, five million Canadians, that have owned crypto. We're seeing a shift."