44th Parl. 1st Sess.
April 5, 2022 10:00AM
moved that Bill C-249, An Act respecting the encouragement of the growth of the cryptoasset sector, be read the second time and referred to a committee.
She said: Madam Speaker, I rise today to speak to my private member's bill, Bill C-249, the encouraging growth of the cryptoasset sector act. It has been 14 years since work conducted by Stuart Haber, W. Scott Stornetta, and Dave Bayer was used by a person operating under the pseudonym Satoshi Nakamoto to launch a concept called blockchain.
Since the Nakamoto paper was published, the concepts it contained have been operationalized the world over to launch a pantheon of innovative products and practices that are revolutionizing how people interact and transact with each other. Canada’s Parliament has yet to debate the cryptoasset sector. This debate today marks the first time we are doing so.
I am going to break down the public policy challenge before us today in six parts. They are what cryptoassets are, why the sector is important to Canada, why Parliament needs to turn its attention to the sector, why this bill is the best approach for Parliament to take in the matter, problems this approach will prevent, and my desired approach to building consensus for this model.
Let us talk about the first point. What are cryptoassets? Within my bill and within my speech today, I use the term “cryptoasset” and define it as, “digital assets that are secured by means of cryptographic systems, including the blockchain system, that do not rely on a central authority and are based on algorithms agreed to by the majority of users.”
Cryptocurrencies, such as Bitcoin and Ethereum, are one type of cryptoasset. Transactions use blockchain to record transactions and issue new units, as opposed to fiat currencies that have a central issuing or regulating authority. Non-fungible tokens, or NFTs, are another cryptoasset. NFTs are digital assets that represent real-world objects such as art, music, in-game items and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
Rather than spend the limited time I have today breaking down the technical aspects of how cryptoassets operate, I encourage colleagues who are not familiar with the subjects to spend some time watching the multitude of videos, reading the articles and looking at the other educational resources that are now available.
I will highlight, however, that a lack of education on the topic among legislators and public servants is a problem that my bill attempts to resolve. The goal of this would be to have public policy happen in an environment based on knowledge and public consultation, rather than polarized partisan interests.
Why is the sector important to Canada? First, cryptoassets represent an important sector that could help to diversify and grow the Canadian economy. To give colleagues a sense of the size of this industry, one recent report suggests that the global cryptocurrency market reached a value of $1.782 billion U.S. in 2021. Looking forward, the publisher of this report expects the market to reach $32.4 billion U.S. by 2027, exhibiting a compound annual growth rate of 58.4% from 2022-27.
The global market for another type of cryptoasset, non-fungible tokens, is expected to grow from $14 billion in 2021 to $21.3 billion in 2022 at a compound annual growth rate of 52.1%. The market is expected to reach $82 billion in 2026 at a compound annual growth rate of 40.2%. Canada should be a natural home for this type of innovation and investment.
Many view the decentralized nature of cryptoassets as an attractive feature in and of itself. By removing intermediaries from computer networks, distributed ledgers can facilitate new types of economic opportunities that were not possible before. The blockchain technology underlying Bitcoin and other cryptocurrencies has been hailed as a potential game-changer for a large number of industries.
Another common reason for investing in cryptoassets is the desire for a reliable, long-term store of value. This property makes cryptocurrency attractive to people who are worried about things such as bank failures, or so some rationale goes.
This brings us to why Parliament needs to turn its attention to the sector. As with any industry, there are massive potential benefits to Canada, as well as potential pitfalls. The call to us, as legislators, should be to find a path that promotes growth and investment in the sector within Canada, while protecting those working in the space, as well as consumers.
Many innovators and proponents of cryptoassets in Canada are actually calling for the federal government to use its convening power to provide policy clarity to the industry. The current lack of clarity, particularly on safeguards to protect those working in the space, is seen as an impediment to investment. That is to say, who would invest in a sector that is likely to be regulated at any time, but likely by people who know little to nothing about how the industry operates? The same could be said for government investment in the sector.
Further, a significant amount of jurisdiction for policy related to the sector falls to the provinces. A patchwork of rules and regulations is popping up across Canada. Provincial jurisdiction must be respected, but the federal government could have a role to play in convening provinces to establish an opt-in set of harmonized policies that would make it easier for investors to operate and to provide safeguards.
At the same time, given the newness of the sector and its rapid pace of growth and innovation, there are risks. Education to help investors evaluate risk could benefit the sector. Specifically, a broader public understanding of what is real and what is speculative mania, what is protected by government regulation and what is not, how to prevent digital asset theft, and how cryptoasset volatility occurs, could benefit the sector, as could safeguards that are present for other asset classes such as traditional securities to prevent fraud and illegal activities.
High profile instances of alleged fraud, such as the QuadrigaCX scandal, which many Canadians will be learning about via the Netflix film on the topic this week, underscore the need for what we are discussing today. Our Parliament should also be seized with this issue because other jurisdictions are well ahead of us on this matter. If we continue to lag in setting a framework for Canada, this will become an impediment in future negotiations regarding trade and will drive talent and capital away from Canada to other jurisdictions with more robust frameworks.
For example, the European Union has recently introduced its proposal for a new EU law on cryptoassets under the Markets in Financial Instruments Directive. The European Blockchain Partnership is also planning a pan-European regulatory sandbox in co-operation with the European Commission for data portability, business-to-business data spaces, smart contracts and digital identity. This will cover sectors including health, the environment, mobility, energy and more.
Last month, U.S. President Joe Biden signed an executive order directing his federal government to come up with a cryptocurrency plan. The order will coordinate efforts among financial regulators to better understand the risks and opportunities presented by digital assets, particularly in the areas of consumer protection, national security and illicit finance.
The Biden administration stated that this was in response to the explosive growth in digital assets and a desire to maintain American technological leadership. The results could shape the contours of a rapidly innovating industry, yet Canada has not moved forward in this regard. At the same time, the innovative functions of blockchain technologies and the decentralized essence of how they function should not be hampered by a lack of clarity or knee-jerk reactions from legislators.
Those who believe that cryptoassets are the means to all sorts of evils are missing the point as much as those who might profess that cryptoassets without any attached policy are the magic wand for all our ills. This is exactly what is happening here in Canada. The political debate on cryptoassets is becoming polarized before we even begin to discuss it in this place.
Some in Canada are advocating for policies that would lead to bans of many types of cryptoassets, which would be a colossal blow to a potential enormous economic boon for our country. On the other hand, some are openly advising the public that cryptocurrencies, which are volatile, currently subject to an enormous amount of regulatory uncertainty and untested as an inflationary hedge against periods of sustained high inflation, are good ways to solve Canada’s inflationary problem.
Rather than go down the path of reactionary populism or highly damaging knee-jerk over-regulation, we should choose a better way. That brings me to what my bill would do.
The bill would require the Minister of Finance to develop a national framework for the cryptoasset sector and, in developing the framework, to consult with persons working in the sector who are designated by provinces and territories. It would require the Minister of Finance to formally ensure that cryptoasset experts are leading voices in the policy development process. It would also be open to public submissions.
Given the newness of the sector, the bill would also enshrine consultation of innovators who work in the space, while asking those who traditionally have primary access to the finance minister on such matters, such as lobbyists and public servants, to engage via their traditional access routes so that a fulsome position on what the government should or should not do is developed. It would enshrine provincial jurisdiction by ensuring that any framework would be on an opt-in-only basis for the provinces, and would require the Minister of Finance to ask the provinces for input during the consultation process. This would prevent policy from happening behind closed doors in the federal government without more open consultation.
The bill takes an optimistic view of the sector, rather than pessimistic. That is, it could be an important part of the Canadian economy. Other, more pessimistic views that have been used in other jurisdictions have functionally kneecapped the space to the detriment of those nation’s economies.
The bill would ask the minister to ensure Canada remains an attractive place to attract and retain investment and talent, while protecting those who work with cryptoassets. Most importantly, rather than prescribing any particular policy, the bill would create a mechanism to formally engage the expertise of cryptoasset talent in policy development. It would require the framework to be reviewed by committees of the House and the Senate, and it would require this work to be done within a three-year period.
My rationale for putting this bill forward is to depoliticize what is becoming a polarized discussion of the space and to open the policy process to those innovators who need us to support them but also not set unnecessary roadblocks that would stand in their way. I am hoping that, if this bill passes, innovators, provinces and those interested in cryptoassets will have a clear and productive mechanism to work with the federal government to drive common-sense public policy that will see Canada become a world leader in this space.
Many innovators, cryptoasset practitioners, bankers, lawyers and members of the general public have expressed great excitement about this open and novel approach to setting public policy for the cryptoasset sector. In fact, I have had legislators from other jurisdictions around the world look at this as a novel approach to tone down the rhetoric on the subject and actually do something that resembles work, which could hopefully be duplicated on a larger scale.
One particular example that I would like to highlight, with regard to feedback, is from Morva Rohani, the executive director of the Canadian Web3 Council. She says, “Bill C-249 has launched a long overdue public policy discussion on the benefits of cryptocurrencies in Canada. The Canadian Web3 Council is supportive of the development of a national framework to encourage the growth of the cryptocurrency sector in consultation with the industry.”
I hope that this bill will give an opportunity for colleagues of all political stripes to educate themselves on cryptoassets and to develop their party’s particular policy stances on the challenges and opportunities the sector presents to our country from a place of knowledge and sound judgment, rather than populism or knee-jerk reactions to regulate away anything new.
To that end, I want to state to all members of the House that I am open to amendments to this bill. I tried to present a framework that could be rigorously reviewed by the finance committee members and witnesses, with constructive amendments to be made on the scope or content provided. If a colleague wants the bill to do more, I encourage them to take it to committee and to amend it.
I hope that colleagues will evaluate this bill in the spirit that it is intended to evoke in the House, and that is a supportive, cross-partisan approach to nurturing a nascent and highly important innovative economic opportunity for our country.
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Madam Speaker, I want to thank the member for Calgary Nose Hill for bringing this important discussion to the House. She articulated in her speech how we really do need to have important conversations about cryptocurrency in the future and how it works. Again, in that spirit of trying to be not partisan, I have read through the bill. I think, by and large, the framework and the idea of forcing those conversations and making sure that we are addressing, as legislators and as lawmakers, how we position this industry in the days ahead is really important.
I looked at subclause 3(1), in terms of the fact that the framework is to “encourage the growth” of the sector. I may agree with that. I certainly have to get my own head wrapped around it, and this will be an important discussion about where I stand on this issue.
Would the member be open to an amendment around, as opposed to saying pro-growth in this sector, at least exploring ways on the administrative burden? She mentioned about not trying to be too partisan one way or the other. Would she address that point on the language and whether we can have something perhaps a little more neutral in saying how best to move forward with the sector writ large?
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Madam Speaker, I thank my hon. colleague from Calgary Nose Hill for her speech. She told us a lot about how cryptocurrencies create such great opportunities.
Peter Callaghan, commander of the Toronto Police Service's financial crimes unit, said, “Cryptocurrency in general is a problem for us, and we realized early on that it was a money laundering tool that could facilitate criminal transactions such the sale of drugs and guns. That is exactly what criminals are doing.”
My question is simple: Is that what the member for Calgary Nose Hill meant when she was talking about great opportunities?
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Madam Speaker, I am thankful for the opportunity to speak today on this important private member's bill. I want to thank my colleague across the aisle, the member for Calgary Nose Hill, for bringing the bill to the House of Commons.
How Canadians use money and make payments is changing, thanks to the emergence of new digital technology. Bill C-249 seeks to understand the benefits of cryptocurrencies and these new technologies. I commend the member opposite for inspiring discussion on this emerging economic sector. This is an important debate to be had.
I first want to highlight the benefits that cryptocurrency has on Canada's economic growth and the future of money in our country.
Billions of dollars of wealth has been created in the cryptocurrency space. Companies are getting on board. Walmart, Reebok and IBM have implemented crypto and blockchain solutions to maintain the transparency and integrity of their supply chains. Internationally, cryptocurrency is a useful tool. After the illegal invasion of Ukraine by Russia, the Ukrainian government pivoted to accept donations of cryptocurrency to fund its military defence and humanitarian aid. They raised over $100 million in support.
Even residents in my riding use cryptocurrency for personal investment opportunities, and I am sure the same can be said for constituents in ridings across our country. It is a popular and growing investment. There are undeniable benefits to cryptocurrency, and the hype to invest is certainly growing. However, the sector does remain under-regulated.
Governments around the world have their work cut out for them to craft legislation and regulate this new technology. Bills like Bill C-249 make important contributions to the debate on how to regulate cryptocurrency. However, I am concerned that it is narrow in scope. While it certainly highlights the benefits of cryptocurrency, I am concerned that it does not necessarily address the risks involved in the cryptoasset sector. Specifically, it does not address the potential vulnerability and financial instability inherent within the cryptoasset industry. These risks, vulnerabilities and instabilities need to be accounted for as we move forward.
As we transition into a digital world, governments must ensure that cryptoassets have proper oversight. Things like cybersecurity provisions must be established for these sectors. Simply, as cryptocurrencies rise in popularity, Canada needs the proper regulatory infrastructure in place to guide, shape and inevitably regulate the growth. Without these safeguards, we put the safety and security of Canadians at risk.
Of utmost concern to me is that we cannot overlook the dark elements that can be a consequence of the unregulated growth of cryptoassets. Around the world, people in the black market are trying to legitimize their wealth by venturing into the crypto space. This illegal and unregulated activity has posed unintended, or perhaps intended, consequences to economies and democracies around the world.
Over the last month, we have seen the Russian oligarchs use cryptoassets to circumvent western economic sanctions and enable the illegal invasion of Ukraine. This allows Russian oligarchs to preserve their wealth amidst the Russian economic crash. It is undermining the international community's economic sanctions and, most importantly, it is enabling the perpetuation of the atrocities that Russia has been committing against Ukraine.
Closer to home, there is also evidence of the use of cryptoassets in illegal activity as well. Just last month, cryptocurrency was identified as enabling the illegal occupations and blockades here in Ottawa, Windsor and Coutts. Digital currencies allowed protesters to receive global donations without any obstruction or regulation. The freedom convoy's own cryptotoken was designed in such a way as to make it difficult for our law enforcement to connect the individual donors to the actual funds, and this is an evolving problem.
Without proper regulation, the presence of cryptocurrency and its illegal activities will continue. Digital currencies undoubtedly appeal to people looking to evade the scrutiny of law enforcement. They are decentralized, which makes it difficult for government to know what is happening. To this point, I reference Matthew Burgoyne, a leading Canadian digital currency lawyer. He stated that, when faced with scrutiny, “crypto can simply be transferred to another wallet address...and it can continue to be transferred in an effort to obscure the original source, or in an effort to remove the funds as much as possible from the wallet that was frozen.”
As digital currency moves from wallet to wallet, it gets harder to track by law enforcement. Without proper regulation at the federal, provincial and territorial levels, cryptocurrency could become a vehicle for abusive transactions, facilitating money laundering, terrorist financing, criminal activity and tax evasion. Transactions involving cryptoassets are also vulnerable to fraud. There is currently inadequate investor and consumer protection for these activities.
The safety and security of Canadians' financial activities are of course always of central concern to our government. Therefore, as we move forward and we craft policy and cryptocurrency legislation, our legislation must ensure that we adequately address these risks. It cannot simply focus on promoting unbridled growth of the cryptoasset. I fear that this is what we would do with the current version of Bill C-249. Our policies must also clearly delineate the shared jurisdictions of this file. Under our constitutional conventions, the federal government must consult with the provinces and their securities regulators on possible regulations to cryptocurrencies. Currently, I do not believe that this bill would do that.
In addition, international institutions and partners also play a key role in our policymaking. Cryptoassets are a transnational asset. Regulating them requires co-operation among countries. We should ensure that international experts from other jurisdictions are included in our policy-making as we move forward.
We must understand the risks of digital currencies just as much as we understand and promote the benefits of them. Cryptocurrencies have numerous benefits locally, federally and internationally. There is no doubt of that. However, without thorough regulations being implemented, these benefits may be outweighed by the risks. There are real conversations that need to be had as citizens, as members of Parliament and as governments, on what the future of money is going to look like. Those conversations must happen sooner rather than later as more and more Canadians invest in cryptocurrency.
Although I do not believe that in its current state this bill adequately addresses those risks, I thank the member for Calgary Nose Hill for bringing this important discussion forward and being open to how it evolves as it moves through the House.
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Madam Speaker, I would like to begin by thanking the member for Calgary Nose Hill for Bill C-249, which is a subject that I find to be most interesting.
The bill is about cryptoassets, cryptocurrencies and virtual currencies. It is truly fascinating because it covers extremely innovative technologies that are being adopted by the more formal economy. We know that cryptoassets and cryptocurrencies are based on transactions authenticated by blockchains. These transactions can take place person to person and on the web, but without any intermediary. It is understandable that those who love technology, especially in the banking world, are fascinated by this and why we can see that there are a certain number of significant risks associated with the development of cryptoassets.
Bill C-249 is basically a bill that promotes cryptocurrencies. One of its main objectives is to ensure the growth of cryptocurrencies. This is one of the fastest-growing sectors, and the market is already doing the work on its own. It is not like Alberta's oil. We do not need public money for it. The industry is self-sustaining.
The bill then talks about the need to lower barriers in a sector to which there are no barriers. This is about regulation. This is an incomplete bill that starts to unravel from the very beginning. The bill then claims we must minimize the administrative burden in a sector where there is virtually no administrative burden.
I do want us to talk about cryptocurrencies. I want us to analyze the sector and consider the state's role and the need for regulation, but this is not a great start. To me, Bill C‑249 sounds like an ad for cryptocurrencies.
This brings me back to yesterday's speech from the Conservative member for Abbotsford. I am bringing this up today because it really stood out to me. Yesterday during the Conservative filibuster, when the member for Abbotsford talked about all the criticisms he made during the prebudget recommendations, I was quite surprised to hear his comment. I was at the Standing Committee on Finance. The committee was discussing the prebudget recommendations and the member for Abbotsford did not make a single recommendation. This year, the Conservatives did not propose a single recommendation. They proposed nothing.
We brought in our witnesses—people from Davie in Quebec City, which still does not have its fair share of federal shipbuilding contracts, our farmers, our community organizations and our businesses, all of whom offered up proposals to stabilize our supply chains—and we made proposals, but the Conservatives had nothing, nothing at all.
Yesterday, the member for Abbotsford said something in connection with Bill C‑249. He said that when parties have pre-budget recommendations—which they did not, of course—they have to set priorities, practise statesmanship and start with what is most important. To me, given the current conditions, the economic recovery, coming to the end of the pandemic and having so much work to do, I am surprised that the Conservatives would use their time in the House to introduce this kind of bill.
Speaking of setting priorities, I decided it was important to get out there and talk to people dealing with the negative repercussions of cryptocurrencies. Such people exist, and I wanted to hear what they had to say. I think it is worthwhile, especially as I also think we need stricter regulations and Bill C‑249 is noticeably lacking.
Consider the Vancouver police, for example. It does not get much more hands-on than those folks. They believe that cryptocurrency ATMs are being used as conduits to move the proceeds of crime. That worries me. The lack of regulations in this area worries me.
As my colleague from Lac-Saint-Jean said earlier, the Toronto police have also indicated that cryptocurrencies in general are problematic. They are known to be a money laundering tool that can facilitate criminal transactions, such as the sale of narcotics and guns, and that is certainly what has materialized.
The member for Calgary Nose Hill was saying that although this is true, any payment method can be used for the same purpose. However, there are varying degrees of ease. Person-to-person transactions without intermediaries and without state regulation make things easier. I am very surprised that Bill C-249, without any hint of a regulatory proposal, comes from the law and order party.
The U.S. Department of Justice has just created a new director position to tackle fraud specifically involving cryptocurrencies. That is in the United States.
In its budget, which was just tabled, Quebec highlights the need to better protect Quebeckers against cyberthreats and expresses the will to combat tax evasion strategies more effectively, which reflects a willingness to do the hard work to ensure that the cryptoasset sector develops in a secure and fair environment for all. That is what the Quebec government is saying, and, in this place, we defend Quebec's interests.
For its part, the IMF, which is attuned to the issue of global monetary and financial stability stated the following:
Crypto assets and associated products and services have grown rapidly in recent years. Furthermore, interlinkages with the regulated financial system are rising. Policymakers struggle to monitor risks from this evolving sector, in which many activities are unregulated. In fact, we think these financial stability risks could soon become systemic in some countries.
Based on what the IMF experts are saying, I feel that they have placed the cart before the horse by introducing a bill that is essentially a tool to promote an industry that is already doing very well.
There is a host of risks for consumers. I like that the title of the bill refers to cryptoassets. We have stopped calling it “cryptocurrency” because it is not really currency and it does not play the same role as currency. It will therefore not replace currency.
Currency is a store of value. Its purpose is to retain value. However, cryptoassets are assets that fluctuate tremendously based on factors such as speculation. This makes the ill-informed investors—if we can call them that—who put their money into them more vulnerable.
Currency is also a unit of account. Until Quebec becomes independent and starts using the Quebec dollar, we will still use the Canadian dollar, which does the job very well. In fact, the value of cryptocurrencies is still assessed against the Canadian dollar. It is also a medium of exchange.
Cryptocurrency also functions as a medium of exchange, but it is a very decentralized medium that can, as I said earlier, facilitate criminal transactions, under-the-table transactions and many others. The fact that it is decentralized makes it all the more important to regulate it. I am worried about that, and so is the Bloc Québécois. We know that we are not the only ones who think that way.
Paul Beaudry, the deputy governor of the Bank of Canada, spoke to us about bitcoin. We know that there are a lot of different cryptoassets and cryptocurrencies, but he told us that Bitcoin was more for speculation than for payment. If we have reached the point where the Bank of Canada is worried about these issues, then perhaps we should be asking the Bank of Canada whether this bill addresses its concerns and meets its expectations. I would venture to say that the bill does not.
I now want to talk about our support for the bill. This bill is at second reading, the stage at which we vote on the principle of the bill. This bill could be improved, and my colleague spoke about that. It could be amended in committee. However, given the need for a framework, for regulations and for consultations with stakeholders, I strongly believe that we would end up having to rewrite the entire bill by making the amendments we would be comfortable with.
The bill would be rewritten so much that I do not think the amendments we would want would even be in order as part of the committee's study of this bill. We therefore think that it might not be a constructive use of parliamentarians' time to send this bill to be studied in committee. For these reasons, the Bloc Québécois will very likely not be able to support the principle of this bill.
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Madam Speaker, my thanks go to the member for Calgary Nose Hill for bringing this bill forward. As others have mentioned, I think this is a really important discussion. Whether we would like it or not, whether people want to be boosters of the industry or critics of it, there is no doubt that this industry is growing, that it is significant and that it is beginning to play a significant role in a number of different financial affairs in a number of different ways. I do think it makes sense to begin having conversations about how we can regulate that space in the public interest.
I appreciate some of the points that have been made about what I might call the aesthetic of the bill, the language that was chosen and the way that it speaks about the industry, but I am going to present a little bit of a different view, I think, in saying that I do not think we should let that get in the way of trying to continue the conversation that was started by this bill just today.
I think we have heard some really important concerns. They are not new. We have heard these concerns out and about, so to speak, about cryptocurrency. We have heard concerns about the way in which it can be used to launder money and the way in which criminal organizations appear to be using cryptocurrency to advance their own illegal agendas. We have also heard concerns elsewhere, outside the debate tonight, about the speculative nature of cryptocurrency and the way it acts for some, apparently, in the way that a gambling addiction does: People get addicted to trying to make quick money off cryptocurrency and exhibit a lot of patterns that are similar to folks who have gambling addictions.
I also want to raise an emerging area of concern in respect to cryptocurrency that has to do with the environment: the amount of real-world energy and real-world costs to the cryptocurrency industry for something that may prove to be fundamentally speculative in value. We are hearing of coal plants and gas plants, for instance, in the United States, that had been heading toward decommissioning but have been given new life and are producing new emissions in order to satisfy the needs of these industries. That is all the more reason that it is imperative for legislators to take on this task sooner rather than later. It is not as though this bill is the gateway to launching the cryptocurrency industry. It is here; it is already active; it is growing exponentially; and it is having real effects.
Oftentimes in this place, we are stuck talking about industries that have been carrying on without any form of regulation, as is the case with this particular industry right now. It is operating, and there are no rules. It is the Wild West. We often talk about things that have been around for a long time that have no regulation. It becomes, as time goes on, even more difficult to regulate in the public interest once the die is cast for industries like this. I think of some of the problems we are experiencing now with social media and some of the attempts that have been made even just recently to try to bring some order to the social media universe and to try to mitigate some of the harms that an unregulated social media space can have for democracy, among other things.
All of that is to say that I welcome this bill, even though I may not like all of the language. Certainly I have been reassured by the debate tonight that if this bill were to go to committee, there would be a lot of people around the table who would have the right concerns and would be interested in figuring out how we can regulate this space in the public interest so that Canadians who wish to do so can avail themselves of whatever benefit there is to this industry. It is reassuring even to have a table where we can talk about what the real benefits are, versus just a kind of participation in a game of speculation in which there are winners and there are losers. I think I am not wrong in saying that predominantly a lot of young men in particular seem to like to invest in cryptocurrency. Some of them have done very well for themselves; some of them lost the shirt off their back, and it will be a long time before they recover from their foray into the world of cryptocurrency.
I think it behooves us as legislators to talk about this. Whether the language of the bill is a little more boosterish than I might like is beside the point. I do not think it is fatal to the project. I would welcome the opportunity to get into this more at committee to ask these very questions, to invoke some of the real expertise from outside this chamber and to help us all learn more about it as legislators. It would also create a forum for the Canadian public, who have a lot of questions about cryptocurrency and what exactly it means, and maybe whether they should invest in it or just ignore it because it is a Ponzi scheme.
I think a lot of Canadians are looking for a credible source of information. A committee would provide an opportunity not only for legislators but for Canadians to follow along to hear from not just industry experts, I hope. I would want to hear from people whose business is consumer protection. They could talk about the impacts I was referring to earlier. They might include addictions specialists who are looking at the gambling aspect of cryptocurrency as experienced by some people. I would also want to hear from people who are watching the environmental impacts of the industry and have something to say about how it ought to proceed. That is not all. I see some heads shaking in the Conservative benches, but that is not about saying no to the industry. I know there is a movement afoot that had suggested how changes to coding language could significantly reduce the environmental impact of cryptocurrency.
For me the real point is that these are things we should be talking about, and we should not be talking about them 20 years from now, as is so often the case with legislatures when it comes to new industries and new technologies. This is usually because it is really hard to find agreement in these kinds of places and we tend to be hypersensitive to the connotation of using this kind of language to describe it as opposed to that. I understand that. I am guilty of it myself. I say “guilty”, but I do not think it is a bad thing in certain contexts. In this case, I really do welcome the opportunity to dive further into this. It is why I am prepared to support the bill at second reading, and I believe my colleagues in the NDP are prepared to support the bill at second reading, in order to try to create a forum to get into these matters more.
There is a real public interest in continuing these conversations, and I am quite reassured by the debate tonight. There are a lot of members of Parliament from all sides of the House who are live to the real concerns and real risks of this industry and also appreciate that there may be some positive potential. We may want to get straight on what that positive potential really is. If we find that this is just a speculative enterprise and it does not add any real value, then perhaps we should be skeptical of it. I do not pretend to know that answer at this point. As a member of the finance committee, I would appreciate the opportunity to delve more deeply into it, and supporting the bill for me and for my NDP colleagues is an opportunity to advance that discussion in a forum where we might hope to make some progress on regulating this industry.
I note that the bill calls for the minister to table a framework. We do not have a regulatory framework in the bill and it does not really authorize anyone to make a regulatory framework. It just calls for a minister in the government, whatever the government of the day may happen to be, to table a document that, as is the wont of this place, will lead to more conversation. There will be more opportunities to criticize. If it is too boosterish, there will be opportunities to criticize that. If it is too heavy-handed from a regulatory point of view and certain people feel that this shuts down the positive opportunity of the industry, whatever that may be, there will be an opportunity to provide feedback on that. Doubtless there will be a government bill at some point before the industry is actually regulated in Canada.
I see this as an important first step in establishing the conversation and taking it seriously here on Parliament Hill. That is why I am pleased to provide my support to the bill today, notwithstanding some of the legitimate criticism that we have heard here tonight.
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Madam Speaker, I want to thank the member for Calgary Nose Hill for the bill that she brought forward to attempt to make Canada a leader in the crypto space, which we kind of already are.
I heard a couple of comments today from speakers about growth. We have to have certainty before we can continue to grow. This is trying to provide certainty to the industry so that people know the rules as they go forward. A couple of years ago, there was a framework specifically around cryptoasset trading platforms. The Canadian securities administrators, with all of their provincial trading commissions, put this together and it set a framework. It is a very public document worked on in collaboration. It established, for exchanges that wanted to be exchanges in this country, a path to that goal. In Ontario, my home province, we have had a number of spot exchange-traded funds in this province, which is significant. The United States does not even have that yet. It only has future exchange-traded funds.
In addition to that, Bitbuy, just in the last quarter of 2021, worked with the OSC IIROC to be a market maker: to be an exchange and a marketplace for cryptoassets to be traded, because this framework was done three years ago. Just as the member for Calgary Nose Hill provides, let us get the experts and the industry to come together so we can get this moving forward. In the United States, people only wish that they had a spot ETF. Let us not get mixed up on the growth. What the member for Calgary Nose Hill is trying to say is let us not get in the way of growth. Let us make sure that industry has certainty so companies will want to come here and invest their billions of dollars.
The market cap of the cryptoassets is $2 trillion. That is in 13 years. The market cap of gold is $10 trillion. Therefore, it is $2 trillion for crypto and it is $10 trillion for gold. How long has gold been around? It has been around since the earth was established. There is $100 trillion in real estate, so there are huge opportunities here. We have to continue to push forward. That is what they want.
I will give an example. Let us look at all the different entities that businesses have to deal with. I made a list. They have to deal with the securities administrations and their provincial administrations, including the OSC and all the ones in all the provinces. IIROC is one they have to deal with. CRA is on the list, for how they are going to be taxed. The entities include the Department of Finance, potentially, the Bank of Canada, potentially, and on and on. When we say that it is the wild west and it is not regulated, that really is not the case, in my opinion. Obviously, people are transferring money into investment accounts, and it is monitored in many different ways including how it is backed, how it is secured and where the assets are held. It is not really the wild west, I would say, and I am sure the chair of the OSC, the executive director and the president would all love to have a comment on that. There is regulation, but we need more certainty because of the investment.
One example is Bitcoin mining, or miners in general, and how they are taxed by the CRA. Where is GST applied? Where is HST applied? When is the actual tax triggered? There is a dispute right now with the CRA as to where and when that occurs. This is what the member for Calgary Nose Hill is talking about. Let us have the framework of industry experts get around the table and say, “Hey, what the heck, are we charging HST every time we mine a Bitcoin?” That does not make any sense. This is not a service business. This is a mining company, just like Kinross Gold or somebody else. That is what we are talking about.
In regard to illicit activity, I am going to say right now that this is the last $20 bill I have. There is more crime done with twenties than will ever be done with cryptocurrency. What I will say is that the amount of crypto crime is decreasing. From 2020 to 2021, it decreased by almost 60%. Why is that? Only a stupid criminal would do a crime with crypto, because it is a public ledger and that wallet has an address.
There was a case where a couple defrauded billions. It was thousands of Bitcoin, and they held onto it for five years. The minute they tried to transfer that money in the fall of 2021, the FBI picked them both up and charged them. Only an idiot criminal, and there are some out there, would do it with this. They are going to go with cash or something else. They are not going to do it with that.
My colleague from Quebec made a comment. We are always getting to know each other, which is great. In Quebec, for example, there are a number of Shakepays. There are Shakepays in Montreal. I am sure some of my colleagues have heard of Shakepay before. Also, there is a Bitcoin mining company. There is about five or six. It is called Bitfarms. There is more than just Bitfarms, but Bitfarms is a $1-billion company traded on a public stock exchange. It went through all the regulatory burden to become publicly traded in la belle province.
I think it would be great if Bitfarms, Shakepay and a number of these Quebec-based companies reached out, did a little government relations, and explained to the government, not in an embarrassing way, but in an informative way, that this is a new industry of 13, 14 years, and explained that CRA income tax issue. That would be great.
To my good colleague from the NDP, who I had the honour of serving with on the industry committee, Bitfarms is 100% renewable energy from Hydro-Québec. It is green. By the way, there is a North American mining council whose mandate is to be a leader in renewable energy. There are great initiatives coming out of this. There are solar initiatives in the southern states, and wind initiatives. Some of the greatest innovation in green energy is actually going to come out of crypto. It is hard to believe, but it is true.
The best and brightest minds. When I was going to university, and that was quite a long time ago, people were learning how to chisel rocks. Now, the best and brightest minds are going into the crypto space. We want the best and brightest to graduate from these great universities and work in Canada. We do not want them to go to Silicon Valley.
In fact, the crypto space is not even in Silicon Valley, it is in Miami and Toronto. That is where we want people to be. The U.S., the UK and the European Union are all working through this process we are proposing here because they see the value in this one-time opportunity to be the world leader in this space. That is what we are trying to do here with this bill.
There is much to talk about. We are having executives from Bitbuy and WonderFi come to speak to us in a couple of weeks. They are going to explain the process they went through to be market-makers in Ontario. They would love to talk to all members of Parliament to explain how the process works and how the regulation works. We are not trying to slow things down.
Business wants certainty. This is how we are going to do it. As well, there is FINTRAC and know your client rules. These are money services businesses. They know what they are doing. They have to go through all these things to do it.
The last thing I will talk about quickly is remittances, as well as Bitcoin, the lightning network and Strike. Twenty-four percent of the GDP in El Salvador is in remittances. That is where somebody in Canada or the U.S. transfers money to a relative. Honduras, Haiti, Jamaica, there are all sorts of them, and they are all over 20%. They go to a money market and they get hosed. I am not against money markets, but I am just saying they get hosed. They can do this with Bitcoin, lightning and on the Strike network. It is that quick, and it costs nothing. That is making a difference.
Two million people in this country are unbanked. This industry is giving people a leg up. We have to make sure that all the technology is in Canada and the innovation is in Canada, so we not only make the lives of Canadians better, but subsequently, give opportunities and livelihoods to people who have never even had a bank account. It has been a real thrill to speak on this.
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Madam Speaker, as I stood up, someone heckled, “Explain Bitcoin.” I can tell members that as much as I would like to think that I have a fairly decent understanding of money supply and how that works, when it comes to cryptocurrency, there is a learning curve that is still required on my part to be able to articulate it in the fashion in which members opposite would like to hear.
However, I can tell members that it is something that is of great concern for all Canadians. The impact it is having in society, not only here in Canada but worldwide, is quite significant, and I think there is a keen interest from a number of stakeholders, whether governments, financial institutions, consumers or producers, in regard to what cryptocurrency is, how it continues to evolve and what impact it is going to have on modern-day society.
As has been pointed out by members on all sides of the House, there are probably more questions regarding the whole concept, which I understand has now been around for over a decade in one form or another, than there are actual answers, so I do believe that we need to see more work done on this particular file.
When I went to university, I had a very basic study of some economic policies, which I enjoyed, and one does get an appreciation of what money supply is. When the member opposite was waving a twenty-dollar bill from his seat as a prop or whatever one might want to call it, the cash that we see in our society is a fraction of the money supply. I think that what we have witnessed over the last many years is different forms of currency coming through in order to facilitate the purchasing and selling of product, whether it is a service or a widget. However, we all know, for example, that at one point in time it would have been through the barter system and, quite frankly, there is, to a certain degree, some people who participate in the barter system. I say that, because at the end of the day, much like currency, whether it is the Canadian or U.S. dollar, it is always going to be there in some form or another, and I feel fairly confident of that.
When we hear about cryptocurrency and the manner in which it is expanding, it is quite significant, and I will expand on that point when the debate comes up next.
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