Ultimately, a community of entrepreneurs and program- mers, with government funding, and later with private capital, brought the Internet to the world. Blockchain, the technology powering Bitcoin and other “
cryptocurrencies,” is generating similar reactions.
Originally driven by “crypto-anarchists,” the open source development movement and technologically savvy investors, blockchain
has the power to disrupt entire industries (including financial
services) or even create the basis for a new peer-to-peer internet.
Further to that, blockchain has the potential to more broadly
distribute the economic benefits of a successful technology by
rewarding the users of the services, not just the early investors in a
Canada’s Blockchain Hub
Blockchain also has a hub of talent in Canada – centered in the
Toronto-Waterloo Region tech corridor. One notable and promising
project, Ethereum, was in large part developed in Canada, and there
are blockchain incubators and other hotly anticipated projects based
But despite this local talent, much of the value generated by
innovation in the blockchain space is being captured outside
Canada. It is a combination of regulatory barriers to cryptocurrency
and token issuances and a general air of regulatory uncertainty that
is driving developers and entrepreneurs to seek out more predictable jurisdictions like Switzerland and Singapore.
By Marko Trivun
Can Canada Unlock its Blockchain Potential?
The greatest risk for Canada is the opportunity cost of not
being a global hub for a potentially revolutionary technology.
These missed opportunities have concrete costs to Canada. Not only
are provincial and federal governments foregoing potentially
significant sources of tax revenue, but talent that may contribute to
the next wave of technological innovation is leaving Canada.
Canadian companies focused on blockchain are increasingly establishing offshore operations as the base for their blockchain activities.
Examples of this include Kik, a Canadian company that excluded
Canadians altogether from its recent token offering due to regulatory uncertainty, and the Ethereum project’s governing foundation,
which is located in Switzerland.
Amid this uncertainty, the greatest risk for Canada is the opportunity cost of not being a global hub for a potentially revolutionary
Regulatory Response to Technology
Regulators’ attitudes toward blockchain technology are understandable: the decentralized, open-source ethos of the blockchain
community transcends borders and facilitates transactional
pseudonymity. Governmental control has been cited as a basis for
bans on cryptocurrency in China and other jurisdictions.
But if Canada is to begin capturing the potential value generated by
blockchain technology, a compromise between regulators and the
blockchain community needs be reached. What might that compromise look like? We look at two of the main regulatory challenges:
securities law and taxation.
In the early days of the Internet, there was much skepticism as to its utility, even while those in the
Blockchain Technology Part 2
vanguard promoted its revolutionary potential.