Lucas Matheson, CEO of Coinbase Canada, was correct to call for ambitious leadership around blockchain adoption. His call for a national crypto strategy sounds great on face value. That uncertainty is mitigated by the urgency created by the imminent April 2025 election. But before we uncritically embrace government intervention, we need to ask a crucial question: are we inviting the fox into the henhouse? Or will it instead turn out to be a national crypto strategy that becomes a bureaucratic labyrinth, waiting to drown the very innovation it’s trying to encourage?

Anytime I hear “national strategy” and “government,” my ears perk up and my stomach drops. This sentiment is exacerbated when the discussion turns to new technologies. It sounds like the kind of thing I would have dreamed up back when I unsuccessfully tried to open my own virtual storefront hawking locally-roasted coffee beans. I found myself spending more time just wrestling with convoluted permit applications and arcane rules and regulations than I was able to focus on building my business. That dream came to a slow, agonizing death, smothered by a blanket of bureaucracy. And I wasn’t even working with something as distracting as crypto on top of it all!

The promise of an effective, coordinated government-led crypto strategy is intoxicating. None of us dispute the fact that we all want Canada to be a leader of the digital economy. We see the stats – 30% crypto adoption by year's end, a diverse user base, and the potential for government efficiency. Let's not be naive. Policy is rife with examples of heavy-handed interventions that, despite having the best of intentions, stifle new and innovative breakthroughs.

Think of the Canadian telecoms industry. For years, it was an industry where a few heavily regulated players competed with one another, leading to high prices and little innovation. Or think of the energy sector, where bureaucratic red tape and interagency environmental reviews frequently kneecap potential game-changing projects.

As if the beauty of Bitcoin and blockchain was not already enough, it gets even better. It's about individual empowerment, not government control. Regulation is certainly needed, but always should be done with the utmost care and caution. What we want instead is a light touch approach that fosters innovation to prevent a heavy-handed regulatory regime from stifling it.

Rather than a one-size-fits-all, government-mandated model, we should try a “sandbox” method. We should allow crypto companies to experiment, innovate and compete with limited government involvement. Leave it up to the market to figure out which of those projects soar or flop. This is not to suggest we abandon all caution. Consumer protection is paramount. Additional flexibility is possible with more targeted and thoughtful regulation, not with a wholesale, top-down bureaucratic restructuring.

  • Telecoms: High prices, slow innovation.
  • Energy: Bureaucratic delays, stifled projects.
  • Crypto?: A similar fate awaits if we're not careful.

Coinbase’s efforts to obtain full dealer registration (IIROC) is indicative and a positive sign, that they are showing the intention to play along with current established structures. We have to make sure that those monitoring frameworks aren’t heavy-handed or discriminatory. Matheson is correct to highlight the lack of banking services that Canadian crypto platforms have been dealt. What’s the hold up with big banks banking crypto firms? Is it true risk aversion, or is it, in point of fact, a softer form of regulatory extortion? This needs to be addressed head-on.

Canada has a real opportunity to be a global crypto leader, but that will only happen if we don’t overstretch our regulatory fingers. We should be federally demanding for less government control and more freedom for crypto innovators to operate. Continue to back the “Stand with Crypto” movement, but hold our elected representatives’ feet to the fire by calling for their support of deregulation and free-market order. Let's foster an environment where innovation can thrive, not one where it's suffocated by bureaucracy.

Let us not forget that the crypto ethos is rooted in decentralization and empowerment. Let’s not let that spirit be killed off by the well-intentioned, but ultimately stifling, hand of government. The future of Canada’s crypto industry is riding on it. The future of innovation depends on it. Let's not let bureaucracy kill it.

Instead of a top-down, government-dictated strategy, let's embrace a "sandbox" approach. Let crypto companies experiment, innovate, and compete with minimal interference. Let the market decide which projects succeed and which fail. This is not to say we throw caution to the wind. Consumer protection is paramount. But that can be achieved through targeted regulation, not a sweeping bureaucratic overhaul.

Coinbase's pursuit of full dealer registration (IIROC) is a positive step, demonstrating a willingness to work within existing frameworks. But we need to ensure that those frameworks are not overly burdensome or discriminatory. Matheson rightly points out the banking challenges faced by crypto platforms in Canada. Why are major banks hesitant to bank crypto companies? Is it genuine risk aversion, or is it a subtle form of regulatory pressure? This needs to be addressed head-on.

A Call to Action: Demand Freedom!

Canada has the potential to be a global crypto leader, but only if we resist the urge to over-regulate. We need to demand less government control and more freedom for crypto innovators. Support the "Stand with Crypto" initiative, but also demand that our elected officials prioritize deregulation and free-market principles. Let's foster an environment where innovation can thrive, not one where it's suffocated by bureaucracy.

We must remember that the spirit of crypto is one of decentralization and individual empowerment. Let's not allow that spirit to be extinguished by the well-intentioned, but ultimately stifling, hand of government. The future of Canada's crypto industry depends on it. The future of innovation depends on it. Let's not let bureaucracy kill it.