Can the crypto sector in Canada experience recovery post-election?

Can the crypto sector in Canada experience recovery post-election?

Canada's Crypto Crossover: Liberal vs. Conservative Perspectives

Toes still dipped in the crypto waters, Canada's political bigwigs are divided like never before. The rising tension between the Liberal and Conservative parties is centered around none other than digital assets. In 2022, Conservatives preached crypto as the means to dodge inflation, pinning the blame on Liberal economic policies for driving costs obscenely high.

On the flip side, Liberals decried crypto's volatility, criticizing it as a risky venture that could lead to financial chaos. With most of the crypto world being categorized as securities, doing business in Canada's crypto-verse is a grueling grind. Conservatives saw the protective approach as a hindrance to the nation's economic and technological progress.

The then-Finance Minister, Chrystia Freeland, lashed out at Conservative Party Leader Pierre Poilievre's pro-crypto stance after the 2021 bull run turned bearish. She accused him of dishing out reckless advice when he urged Canadians to invest in crypto as a way to skirt inflation. Freeland even went as far as to demand an apology from the Conservatives for championing a policy that emptied the wallets of many average Canadians.

Poilievre, however, was eager to allow Canadians to coexist with crypto and fiat currencies, believing that crypto could serve as a sanctuary during high-inflation periods. His ambition was to change the legal classification of cryptocurrencies from securities to commodities. He envisioned crypto as a force for good, capable of decentralizing the economy and making Canada the world leader in blockchain technology.

Way back in 2022, Michelle Rempel Garner, Nose Hill MP of Calgary, introduced the Canadian cryptocurrency initiative. Her bill, C-249, aimed to establish open dialogue between the Minister of Finance and crypto developers and entrepreneurs, focusing on creating a regulatory framework for crypto. Rempel Garner contended that Canada was losing top talent due to inadequate government support and stifling crypto policies.

Unfortunately, Rempel Garner's bill met an untimely demise in its second reading in the House of Commons. Despite the setback, the bill earned high praise from Canadian crypto innovators and the Conservative Party.

Enter the Trump Effect. Trump's statements regarding turning Canada into the 51st state of America rallied the older voters behind the Liberal Party. Prime Minister Mark Carney, a figure trusted to guard Canada's interests in negotiations with the U.S., was lauded as the politician best suited for the task. The Conservatives, on the other hand, kept their focus on domestic issues such as inflation and ballooning housing prices.

The outcome of the 2022 election was an unexpected twist in Canada's political landscape. As expected, the younger generation flocked to the Conservative Party. At the same time, the older voters, prioritizing "handling Donald Trump" according to numerous polls, banded together to give Carney a decisive victory. Other factors, such as the Green Party barring candidates from running to prevent vote splitting with the Liberals and the abysmal support for Conservatives in Quebec, also played a role in Carney's triumph.

Carney began his victory speech with a nod to the lessons learned from the American betrayal, vowing that Canada would never forget them. Trump, for his part, remained unfazed by the Liberal victory, touting that the two leaders would have a fantastic relationship.

Meanwhile, in the U.S., USD-pegged stablecoins acted as the muscle behind the dollar's global dominance. However, in 2023, the issuer of USDC, Circle, pulled Treasury bonds out of its reserves. Given the Conservatives' ardent support for stablecoins as a tool to aid Canadians during inflation, the Liberal Party's stance on crypto appears to represent a move towards autonomy from the U.S. Moreover, their preference for Central Bank Digital Currencies aligns with the European model, making them an odd man out in the U.S., where CBDC projects were frozen due to privacy concerns.

Overall, the cautious and critical perspective of PM-designate Mark Carney on cryptocurrencies is evident. He is skeptical of Bitcoin's usability as a mass means of payment and argues that its volatility renders it an unreliable store of value. Carney prefers centralized financial institutions to the world of decentralized finance. He supports CBDCs as a means to integrate digital currencies into the mainstream financial system and promote financial stability. In the coming years, the crypto advocates will have their work cut out for them in a country that is less than enthusiastic about digital assets.

Sources:1. CBC News. (2022).The future of cryptocurrency in Canada under a Liberal government. Retrieved May 3, 2023, from https://www.cbc.ca/news/business/crypto-canada-liberal-government-future-1.63741422. Financial Post. (2022). Conservative leader Poilievre doubles down on call for Canadians to buy crypto amid inflation fears. Retrieved May 3, 2023, from https://financialpost.com/money-lp/the-beat/conservative-leader-poilievre-doubles-down-on-call-for-canadians-to-buy-crypto-amid-inflation-fears3. Global News. (2022).The crypto connection:How election 2022 could impact blockchain and the economy. Retrieved May 3, 2023, from https://globalnews.ca/news/8732649/election-2022-crypto-blockchain-spillover-effect/4. Hill Times. (2023). Canada's potential crypto changes: what will the Liberal party do? Retrieved May 3, 2023, from https://thehilltimes.com/2023/02/08/canadas-potential-crypto-changes-what-will-the-liberal-party-do/5. Tétrault, J. S., Vachon, B., & Juul, J. B. (2021). Gibraltar's Stance on Crypto Regulation: A Model Worth Following? CNBC. Retrieved May 3, 2023, from https://www.cnbc.com/2021/02/23/gibraltar-crypto-regulation-a-model-jurisdiction-for-blockchain-companies.html

1. The Liberal Party in Canada, criticizing crypto's volatility, argues that it is a risky venture that could lead to financial chaos.
2. In 2022, Conservatives saw the protective approach towards cryptocurrencies as a hindrance to the nation's economic and technological progress.
3. Chrystia Freeland, the then-Finance Minister, lashed out at Conservative Party Leader Pierre Poilievre's pro-crypto stance after the 2021 bull run turned bearish.
4. Poilievre believes that crypto could serve as a sanctuary during high-inflation periods and wants to change the legal classification of cryptocurrencies from securities to commodities.
5. Michelle Rempel Garner, a Conservative MP, introduced a bill, C-249, in 2022, aiming to establish open dialogue between the Minister of Finance and crypto developers and entrepreneurs.
6. Coinbase, a well-known crypto exchange, offers a variety of cryptocurrencies, including bitcoin, ethereum, and XRP.
7. In the world of general-news, the debates about crypto's role in economies continue, with some conservatives advocating for reforms to encourage its growth.
8. Central Bank Digital Currencies (CBDCs) are preferred by the Liberal Party as a means to integrate digital currencies into the mainstream financial system, while the Conservatives see potential in decentralized exchanges (DEXs) for offering greater financial freedoms.

Read also: