Canada could be throwing its weight behind the blockchain industry in the coming months, concluded a report from the House of Commons highlighting the technology’s benefits.
The 62-page report stemmed from the Standing Committee on Industry and Technology, urging the government to recognize blockchain “as an emerging industry.” Chaired by Joel Lightbound, the report resulted from several meetings and testimonies from key industry stakeholders.
The report noted that blockchain could play a significant role in reforming the financial services sector while finding applications in the supply chain and manufacturing industries. A small fraction of Canadian business entities are switching to blockchain-based systems, with 13% of citizens owning at least one kind of digital asset.
However, the report noted that unclear regulations may drive away innovation and Canadian Web3 to other jurisdictions.
“The lack of clarity and the lack of support from a funding perspective have ultimately driven a lot of our talent away,” Jamie Leverton, CEO of Hut 8 Mining Corporation, said. “Tons of talent were born in Canada. They are subsequently taking their business, their innovation, their property, and establishing themselves elsewhere in the world.”
Currently, local regulations are keeping pace with global best practices, making them capable of protecting investors from most risks. Canadian authorities famously issued several regulations for the industry in the wake of the 2019 implosion of the QuadrigaCX exchange.
To encourage innovation, the report made 16 recommendations to the government, ranging from establishing a national blockchain strategy and fostering opportunities for international cooperation. Authorities are encouraged to develop sandboxes to allow innovators to build without regulatory hindrances, particularly with stablecoins.
Other recommendations include launching a public awareness campaign to warn the public about the risks associated with investing in digital currencies.
Comply or leave Canada
Canadian regulators have been mounting pressure on foreign-based digital asset exchanges to comply with local regulations or face dire sanctions. The increased scrutiny has led to a wave of high-profile exits from the country, with OKX blaming “new regulations for its exits.”
Binance, Bybit, dYdX, and Paxos have all announced plans to halt operations in Canada following heightened pressure from local regulators.
“It has always been Bybit’s primary objective to operate our business in compliance with all relevant rules and regulations in Canada,” read Bybit’s exit statement. “In light of recent regulatory development, Bybit has made the difficult but necessary decision to pause the availability of our products and services.”
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