Blurttradinghub Academy | Cryptocurrency in Canada: Fluid but Chilly

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Although we are a long way from the wild west days of cryptocurrency, Canadian investors are increasingly getting their shares of the action through an ETF and even a C$50m Initial Coin Offering.

On the same day that Bitcoin prices peaked above US$8,000 in September 2017, the TMX Group announced that it had approved the listing of a new Bitcoin-linked ETF on its X-Trackers Exchange Traded Funds (ETF) Market, which allows retail investors to invest in Bitcoin by direct purchase or through a broker.

The addition of the Bitcoin Tracker One ETN (ticker ETN) to its suite of exchange traded products (ETFs) represented an important milestone for the industry. In February 2017, the Bank of Canada raised concerns that cryptocurrencies, like Bitcoin, could pose a threat to the financial system.

Just a few months later, in July 2017, the CEO of the Bank of Canada, Stephen Poloz, reminded the financial sector that their risk-taking in the crypto-sector could reflect some of the weaknesses the financial system already faced. In a blog post, Poloz said,

"Is it a problem that no one can predict where cryptocurrencies will be in 10 years? Or is it a problem that they will be more volatile, less useful and, therefore, less desirable than other things we might do instead?"

He added that while it's important to understand the potential risks, we should be looking at the big picture. As it turns out, the risk to the system posed by Bitcoin and other cryptocurrencies is only limited to how governments and banks choose to regulate them.

Bitcoin and Crypto-Currencies in Canada: The Death of Fear

A fascinating aspect of the entire Bitcoin craze is the fact that it has seemingly dissipated all the negative associations that it used to have. What was once feared and treated with suspicion is now being embraced by a growing list of investors, including retail investors.

How does the Crypto-Crypto community feel about this?

The reason they are so willing to invest is because they are confident about the long-term potential of Bitcoin.

Bitcoiners feel they have a positive message about the future of money, and an unshakeable belief that the system will work out for the benefit of the whole.

In the U.S, one of the key reasons to invest in Bitcoin is because the state of Nevada offers exclusive tax breaks on Bitcoin mining.

In a 2017 article in the Guardian, author Jon Matonis said,

"Our politicians need to realize that blockchain [the technology behind Bitcoin] is not a fad, it is the future. Cryptocurrencies are disruptive, but governments are equally disruptive and they need to recognize that too."

Another Canadian investor explained it as being an investment in the future:

"Cryptocurrencies [are] an idea whose time has come… you cannot shut down a fully developed idea. People who have experience with a thing that has been around for thousands of years should know better, but I have no doubt that this is something that will change the world."

In December 2017, Business in Vancouver reported that the federal government had authorized the first of a series of five C$50m cryptofunds that are authorized to operate exclusively with cryptocurrencies.

At the time, Canada's minister of finance, Bill Morneau, said,

"With an increasing number of financial institutions looking to gain market access to this new asset class, the federal government is making it easier for these institutions to serve this important segment of the Canadian economy."

As of today, the total value of all Bitcoin in circulation is more than $140 billion, more than eight times the size of the entire global gold market.

Why are crypto-currency prices still soaring? Because there is a limited supply of these currencies, which are created by mining.

In 2013, Bitcoin was adopted as the world's first decentralized digital currency. From its birth, Bitcoin had an energy footprint of zero.