Since first introduced in 2009 with the launch of Bitcoin, cryptocurrencies are becoming more widespread all around the globe. That includes Canada, where countless businesses are beginning to accept digital currency as payment and where nearly 4 million Canadians own cryptocurrencies.
As more Canadian citizens and businesses continue to adopt crypto into their daily lives and financial portfolios, it leaves many wondering what impact crypto will have on the Canadian economy.
Adoption and Integration
The Ontario Securities Commission shared that 38% of Canadians believe that crypto plays a key role in the country’s financial system, and, they may just be right. In recent years Canada has seen a jump in the number of businesses accepting cryptocurrency as a form of payment along with a growing number of individuals learning about and investing in crypto.
Canada now boasts Bitcoin ATMs, with most of the major cities in the country offering Bitcoin ATMs to users. The latest data from 2022 shows that Toronto has over 800 Bitcoin ATMs, while Montreal comes in second with just over 200.
Other cities in the country, like Vancouver, Edmonton, and Calgary have between 170 to just over 200 Bitcoin ATMs, too. This shows a wide acceptance of crypto, allowing digital currency owners the means to use their funds while in major cities.
Beyond Bitcoin ATMs, a few major industries in Canada have begun adopting crypto to meet the growing consumer demand. While each industry looks slightly different, they’ve all decided that accepting digital currency as a form of payment is a wise business move and will expand their target audience. A few of the top Canadian business sectors accepting crypto are:
- Real Estate: Some real estate agents and brokers allow buyers to purchase property using digital currency. By doing this, these real estate businesses are able to offer their clients convenience and efficiency. Furthermore, international buyers are able to purchase using crypto without the hassle of currency conversions.
- Online Gambling: Online betting sites in Canada have started to adopt crypto, allowing players to buy in, wager, and withdraw funds using digital currency. Most sites accept Bitcoin, which is the most popular crypto for wagering, however many also accept Ethereum, Dogecoin, Litecoin, and Litecoin Cash. Michael Graw, crypto expert, explains that crypto casinos, like the ones here, offer players a level of anonymity not often found on traditional betting sites. In addition, crypto offers quick transactions and reduced transfer fees, making this a quickly growing crypto sector in Canada.
- E-commerce: As more Canadian consumers start shopping online, a growing number of e-commerce businesses are offering crypto as a payment method. E-commerce businesses often accept crypto like Bitcoin and Ethereum. By accepting digital currency as a form of payment, businesses can set themselves apart and appeal to a tech-savvy audience.
- Hospitality and Tourism: Canada welcomes over 22 million tourists each year. Because of its booming tourism sector, many hospitality and tourism businesses have started to accept crypto as a form of payment. Not only is it popular with the domestic market, but international travelers visiting from other countries often appreciate being able to spend crypto and not dealing with currency exchange rates and transfer fees during their travels.
The sectors mentioned above include some, but not all, of the business sectors in Canada that are beginning to use cryptocurrency. By accepting cryptocurrency, these sectors are driving innovation and expanding market opportunities, and this is having an impact on Canada’s economy.
Regulatory Environment in Canada
Canada as a whole has been very welcoming to cryptocurrency. Regulators in the country have worked hard to develop a comprehensive regulatory framework to help protect consumers and businesses using crypto. However, crypto is still relatively new and regulations are still being developed, updated, and changed to suit the always-changing world of crypto.
Currently, in Canada, there are regulations around crypto exchanges. They must register with the Financial Transactions and Reports Analysis Centre to comply with anti-money laundering and anti-terrorist financing rules and laws that are in place. Currently, citizens in Canada are legally allowed to use crypto for everyday transactions.
Because Canada’s government has been forward-thinking and proactive in establishing regulations, the country has a framework around crypto use that supports integrating digital currency into the country’s economy.
Cryptocurrency Investment
While many Canadians opt to purchase crypto and then use it for day-to-day transactions, others view it as an investment and use it to diversify their portfolio. Crypto investments have significantly changed the investment dynamics in the country, as more and more Canadians are opting to invest in cryptocurrencies rather than traditional outlets like stocks and bonds.
Investors view cryptocurrency as an investment opportunity that offers diversification and possibly very high returns. Although, it’s worth noting that it can be an extremely volatile investment class. As more Canadians put their money into crypto, rather than traditional portfolio assets, the Canadian economy may feel this shift.
International Trade and Remittances
Another way that crypto is affecting the economy in Canada is through international trade and remittances. Cryptocurrency supports easy transactions across international borders, so many users opt to send funds around the world using crypto, rather than fiat currency.
Businesses in Canada are using crypto for international trade, rather than traditional payment methods because it offers quicker transfer times, reduced transaction costs, and zero currency exchange risks.
Furthermore, international remittances are increasingly being sent to and from Canada using cryptocurrency, for many of the same reasons that businesses are opting to send transfers internationally using crypto. Users can bypass exchange rates, send funds faster, and pay less in transaction fees.
Economic Resilience and Innovation
By adopting crypto and using another form of payment, the Canadian economy may be able to become more resilient over time. As recent years have shown, economic resilience and innovation are key.
Beyond simple day-to-day purchases, cryptocurrency offers the Canadian economy further innovative benefits. With blockchain technology, cryptocurrency can support the Canadian economy in being more resilient during uncertain times. In some cases, it could help streamline supply chains and even enable remote work and collaborations across the country or beyond.
Adding another currency into the mix allows Canada to fortify its economy and potentially grow markets.
Financial Inclusion
Cryptocurrency can support financial inclusion by providing access to underserved populations in Canada. This may have an impact on the Canadian economy, as underserved populations who currently do not use traditional banking methods may opt to use cryptocurrency.
Challenges and Risks
While adopting crypto in Canada offers several key benefits to the country’s economy, it is not without challenges and risks. One of the largest challenges to overcome with crypto is its volatility. Crypto is known to vary in value quickly and at any time.
Regulations are another ongoing challenge. Although Canada has worked hard to put crypto regulations into place, this will involve ongoing work and continuous updates to stay up to date as things change.
Finally, cryptocurrency uses large amounts of energy and may hurt the environment in Canada. If the country starts to rely too heavily on crypto, this could pose a problem. To combat this, Canada should look to green energy sourcing for crypto mining, if possible.
Conclusion
The use of cryptocurrency in Canada is becoming more popular and widespread. More consumers are starting to use crypto, either for day-to-day purchases, remittances, or investments. Additionally, a variety of business sectors in Canada have begun adopting crypto as a payment method to meet consumer demand.
With the growing adoption of crypto, the government has worked hard to put digital currency regulations in place to protect consumers and businesses alike. Adding virtual currencies to the previous fiat currency-based economy in Canada will likely bolster the resilience of the country’s economy and foster innovation.
Article and permission to publish here provided by Bazoom. Originally written for Supply Chain Game Changer and published on April 8, 2024.
Cover photo by Kanchanara on Unsplash.