What Canada should do to be a global crypto leader

Canada is headed for a federal election, and it comes at a crossroads for the crypto industry. As countries around the world race to embrace digital assets, Canada risks falling behind. The upcoming election presents a critical moment for Canada to consider its position on digital assets, which could significantly influence its role in the global digital economy. Canada is a global leader in crypto — it’s the birthplace of Ethereum and the first Bitcoin ETF —but if we don’t act quickly, we risk falling behind and becoming less integrated into a global digital economy. 

With an estimated five million Canadians already holding crypto, there is strong appetite for reform. 86% of Canadians agree their financial system could use an update. The majority feel that the system is not fair for everyone (80%) and is out of touch (76%). Nearly a third of Canadians (29%) said they would be more inclined to buy cryptocurrency if there was more regulation in the industry.

Over the past several years, Coinbase has worked closely with Canadian regulators to establish a policy framework that protects consumers while embracing innovation, culminating in Coinbase being registered as a Restricted Dealer by the Canadian Securities Administrators in April 2024. These are promising first steps, but more needs to be done to unlock Canada’s full potential.

The next federal government needs to make advancing Canada’s blockchain ecosystem a priority by introducing clear, innovation-friendly regulatory reform. 

These changes include: 

1. Launch a government crypto task force within the first 100 days to create a national crypto strategy: This task force must bring together leaders from across the industry — from the public and private sectors, and academia, to put a plan into action.

2. Establish a bitcoin reserve: Jurisdictions around the world, including the United States, have moved to launch a strategic bitcoin reserve. Canada should do the same — it would help diversify government holdings and hedge against financial risks.

3. Create federal regulation of stablecoins: Stablecoins will make transactions faster, cheaper, and more efficient, and help modernize our digital payment infrastructure. But Canada lacks a clear path for stablecoin adoption. Government needs to remove securities regulation barriers for fiat-backed stablecoins, and align with international jurisdictions by treating them as payment instruments rather than securities.

4. Clearly define crypto: For Canadians to embrace crypto, they need to understand the differences between assets, whether they’re meme tokens, utility tokens, yield tokens, or NFTs. The next government must effectively clarify how digital assets are classified.

5. Unlock crypto mining: With some of the cheapest energy in the world, Canada has the opportunity to emerge as the crypto mining capital and unlock over $100 billion of investment. A new government needs to make it easier for Canadians to build large crypto and AI data centers, and that starts with cutting red tape and taxes that make it difficult to establish mining operations.

6. Allow banks to hold and use crypto safely: Increasing digital asset adoption will require reforms to the banking industry. Regulations need to be revised to allow banks to store crypto, and update Canada's consumer-driven banking framework to enable unified management of traditional and digital assets. Reforms are also needed to prohibit financial institutions from arbitrarily denying basic banking and insurance services to Web3 businesses.

Canada has an opportunity to cement its place as a global leader in digital assets, but the next federal government must act decisively to enact real change. No matter which party forms government, Coinbase is ready to collaborate with Canadian policymakers, regulators, and industry leaders, to shape a financial future that is innovative, secure, and accessible for all. 

The next chapter for Canada must embrace innovation and technology to modernize our financial system. It’s critical our elected officials understand the opportunity for digital assets to help. Coinbase supports Stand with Crypto Canada - an industry led organization helping to educate and inspire political leaders to embrace and champion digital assets in Canada. 

You’re encouraged to get involved and help make crypto accessible for all Canadians. Consider signing up: https://www.ca.standwithcrypto.org/