Coinbase CEO praises Canadian regulators amid expansion

Ben Cousins, BNN Bloomberg

Coinbase CEO Brian Armstrong is bullish on the Canadian cryptocurrency landscape and its regulatory framework as the company begins its expansion into Canada.

In speaking at a fireside chat in Toronto on Tuesday to celebrate his company’s launch in Canada, Armstrong had high praise for Canadian regulators for making the guidelines simple.

“You're in a very lucky position that you have one federal regulator of both commodities and securities, in the U.S. that's turned into a bit of a jump ball,” he told those in attendance. “It's very political.”

“I think we just need sensible regulation and Canada has shown great leadership so far.”

In Canada, regulators treat cryptocurrency as a security, and companies entering the market must sign undertakings to comply with investor protections. The Ontario Securities Commission has issued a hardline on unregistered crypto exchanges, which ultimately resulted in FTX and Binance leaving the market.

“Canada can rightfully lord that over the U.S. that they are doing a better job creating regulatory clarity around crypto,” Armstrong said.

“I'll take some pointers home from this trip for our U.S. counterparts.”

Coinbase signed the undertakings in March and officially launched in Canada back in August. It has rolled out a partnership with Interac for e-transfer capability and the ability to withdraw Canadian dollars from their wallets.

There’s serious Canadian interest in crypto. A 2022 survey from the Ontario Securities Commission found that 31 per cent of Canadians intend to own crypto assets in the next year, while Coinbase ranks it as the third-most crypto-aware nation in the world.

WHAT’S IN STORE FOR CRYPTO?

Coinbase started as a payments company, but shifted to a crypto trading in its early days. Armstrong believes the future still lies in payments, but processing delays need to come down before it will be adapted more widely.

“If you're going to a merchant, or you're going to some shop where you want to buy something, you don't want to be sitting there for five minutes waiting for the transaction to confirm,” he said.

“The aggressive milestone I've given the team is ‘How do we get these to under one second?’”

Armstrong also sees a reimagining of NFTs away from collectible art and more into a way for fans to support an artist or musician.

“Creative people, whether they're hosting a blog post, or they're a musician, or they're a video content creator, I think they're going to want to have a direct way to monetize with their fans,” he said.

Armstrong also sees a world in which crypto wallets such as Coinbase have built-in internet browsers, which would make crypto payments on the web much smoother.

“Self-custodial wallets in crypto may actually evolve to really be the next version of browsers, because it'll be the internet with an internet-native payment method built right in,” he said. “It's really incredible to think about that a lot of the commerce today does happen with people typing in this number from a credit card.”

Respondents to Bank of Canada questionnaire largely oppose creating a digital loonie

Nojoud Al Mallees, The Canadian Press

The Bank of Canada’s public consultations on the creation of a digital Canadian dollar reveal most respondents are opposed to it.  

The central bank released its findings Wednesday that show more than 80 per cent of respondents strongly opposed the Bank of Canada researching and building the capability to issue a digital dollar.  

The vast majority of respondents also said they do not trust the Bank of Canada to issue a secure digital currency. 

Among the top concerns was privacy, with many respondents valuing the anonymity associated with cash. Moreover, the questionnaire revealed low levels of trust in institutions to protect personal data. 

The central bank says it will explore options for a digital dollar where identification is not necessary for basic transactions, as is the case with cash.

The Bank of Canada noted the findings do not necessarily reflect the views of the overall public because participants self-selected to respond to the questionnaire. 

As more people go cashless, central banks around the world are researching the possibility of creating digital versions of currencies.  

A digital currency would be different from cryptocurrencies because it would be backed by the central bank and its value wouldn't change since it would be just another form of existing Canadian currency. 

In 2020, the Bank of Canada announced that it would build a contingency plan for the creation of a digital currency, should the need for it ever arise. 

While the public consultations aimed to gauge interest in a digital currency, the central bank said the decision to create a digital dollar is for Parliament to make. 

"Our responsibility is to ensure the Canadian payments system is ready for the economy of the future," Bank of Canada senior deputy governor Carolyn Rogers said in a statement. 

"The way people pay for things and use money is changing. If Canadians decide a digital dollar is necessary, our obligation is to be ready." 

Conservative Leader Pierre Poilievre has vehemently opposed the creation of a digital currency, proposing last year to ban the Bank of Canada from creating one.  

At the same time, he has previously promoted the use of cryptocurrencies and suggested it offered Canadians a way to opt out of inflation, though he has shifted away from the topic more recently.  

The central bank also sought out the thoughts of other stakeholders on the creation of a digital currency, including the financial sector and civil society organizations.

Financial sector stakeholders said they wanted more information on how a digital currency would work to better understand the implications for their business models.

The central bank says a digital currency would not pay interest, in order to mitigate the potential risk that a digital dollar would replace commercial bank deposits.

The Bank of Canada's engagement with civil society groups that advocate for Canadians with disabilities, consumers and low-income Canadians found these groups mainly supported a digital currency if its design would remove existing barriers.

This report by The Canadian Press was first published Nov. 29, 2023.