As cryptocurrency continues to gain prominence in global finance, regulatory frameworks are evolving to address this new asset class. The United States and Canada, two major North American economies, have taken different paths in their approach to cryptocurrency regulation. Cryptocurrency has become a significant talking point in the 2024 US presidential election, leading to a greater emphasis on regulatory approaches and their possible consequences.
Canada’s Proactive Stance
Canada has taken a more open and forward-thinking approach to cryptocurrency regulation. As early as 2013, the Canadian government published an analysis of the risks associated with cryptocurrencies, demonstrating early recognition of the technology’s potential impact. This proactive stance has allowed Canada to stay ahead of the curve in several key areas:
- ETF approvals: Canada became the first country to approve a Bitcoin exchange-traded fund (ETF) in 2021, followed shortly by Ethereum ETFs. This move provided investors with regulated exposure to cryptocurrencies through traditional financial instruments.
- Comprehensive framework: The Canadian Securities Administrators (CSA) have consistently provided guidance on how securities laws apply to cryptocurrencies and Initial Coin Offerings (ICOs), offering clarity to market participants.
- Market integration: Cryptocurrency has become more integrated into Canada’s financial ecosystem, with the crypto market revenue forecast to reach $1.7 billion in 2024. Various types of businesses in Canada offer cryptocurrency payment options or have crypto ATMs. Gambling sites like the crypto casinos recommended by newsbtc.com are also accessible, offering innovative approaches and varied offerings, indicating a strong demand for crypto gaming options in this market. There is growing acceptance across various sectors, with particular activity in major urban areas.
The United States Evolving Approach
The US regulatory landscape has been characterized by a more cautious and sometimes fragmented approach:
- Delayed ETF approvals: The US only approved spot Bitcoin ETFs in January 2024, with Ethereum spot ETFs following in July 2024, years after Canada’s approvals.
- Regulatory uncertainty: The ongoing debate over whether cryptocurrencies should be classified as securities or commodities has created uncertainty for market participants.
- Enforcement-first approach: The SEC has filed numerous lawsuits against crypto companies, leading to tension between regulators and the industry.
Lessons for US Policymakers
Embrace Regulatory Innovation
Canada’s early approval of crypto ETFs showcases the advantages of regulatory innovation. Canada has encouraged innovation and protected investors by offering a regulated platform for crypto investments. The US could learn from this approach by supporting innovation while ensuring consumer protections are in place.
Provide Clear Guidance
The CSA’s consistent guidance on how securities laws apply to cryptocurrencies has provided much-needed clarity for businesses and investors. US regulators could take a cue from this approach, offering more comprehensive and timely guidance to reduce uncertainty in the market.
Foster Collaboration Between Regulators and Industry
Canada has been consistently interacting with participants in the market. An instance of this is when the CSA decided to extend the deadline for the implementation of its temporary approach to value-referenced crypto assets (VRCAs), showcasing adaptability and attentiveness to the concerns of the industry. Regulators in the US could learn from this by enhancing communication and cooperation with stakeholders in the crypto industry.
Develop a Unified Regulatory Framework
While Canada’s regulatory approach is not without challenges, it has generally been more cohesive than the US approach. The passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) in the US House in May 2024 is a step towards a more unified framework, but further efforts are needed to create a comprehensive regulatory environment.
Crypto as an Election Issue
The 2024 US presidential election has brought cryptocurrency regulation to the forefront of political discourse. Candidates’ stances on crypto could influence voter decisions, particularly among younger demographics and those involved in the crypto industry.
Trump’s Crypto Pivot
Donald Trump’s acceptance of cryptocurrency represents a major change from his previous doubts. During the Bitcoin 2024 event in Nashville, Trump presented himself as a supporter of virtual assets, promising to establish America as the leading hub for crypto and establish a national reserve of Bitcoin. This transition highlights the increasing relevance of cryptocurrency in political circles and policy debates.
Harris’s Evolving Stance
While Vice President Kamala Harris has not yet taken a definitive stance on crypto policy, her campaign has engaged with crypto representatives. There is increasing pressure from pro-crypto Democrats for her to adopt a more favorable approach, highlighting the internal debate within the Democratic Party on balancing innovation with regulation.
The Role of Industry Influence
The crypto industry’s significant financial contributions to campaigns and super PACs have elevated the importance of crypto policies in the election. The Fairshake super PAC, backed by Coinbase, has raised over $200 million to support pro-crypto candidates. The significant involvement of companies in this sector highlights the need for regulations that find a middle ground between safeguarding consumers and fostering creativity.
