Key Takeaways

• Canada lacks a cohesive national crypto strategy, putting it behind other G7 countries.
• Venture capital investment has declined, signaling low confidence in the regulatory environment.
• Talent is leaving Canada, largely due to high taxes and limited support for digital entrepreneurs.
• Stablecoins offer untapped potential, but overregulation is stifling progress.
• Crypto businesses struggle with banking access, further deterring innovation.

Crypto Regulation: Still Missing From Canada’s Agenda

Despite a federal election that touched on everything from healthcare to housing, cryptocurrency and blockchain innovation received little more than a passing mention.

Poll Predicting The Next Canadian Prime Minister

Source: Polymarket

In fact, none of the major parties included crypto policy in their platforms, reflecting a troubling lack of urgency. As other countries push for regulatory clarity and technological advancement, Canada’s silence is creating uncertainty.

Pandemic-Era Lows

A recent report from the Canadian Venture Capital and Private Equity Association (CVCA) revealed that seed-stage investment in Canada has dropped to pandemic-era lows in Q1 2025. This decline is a symptom of a broader failure to nurture the digital asset ecosystem.

In contrast, countries across Europe, Asia, and the United States are making deliberate efforts to de-risk the sector and attract crypto startups and capital.

Can a Cabinet Appointment Turn the Tide?

The appointment of Evan Solomon as Minister of Artificial Intelligence and Digital Innovation could mark a turning point, but only if this signals a larger shift in thinking. While Solomon’s background in media raises questions about domain expertise, his role could offer a fresh platform for tech-forward policy.

The New Canadian Minister Of Artificial Intelligence & Digital Innovation, Evan Solomon

Source: Canadian House Of Commons

However, real change depends on whether the government is willing to embrace blockchain as part of the larger digital economy. Canada needs a forward-looking digital policy that includes not just AI, but also decentralized technologies like crypto and Web3.

Plugging The Digital Brain Drain

Canada has long been a global leader in scientific research, thanks to institutions like Toronto’s Vector Institute, MILA in Montreal, and the Institute for Quantum Computing in Waterloo. But while the country nurtures top-tier talent, they consistently lose it to more supportive jurisdictions.

According to industry estimates, nearly two-thirds of Canadian software engineering graduates leave the country for better opportunities elsewhere. Why? The answer lies in burdensome tax structures, lack of funding for startups, and unclear innovation policy.

Other countries are getting creative. Portugal, for example, offers tax incentives to attract foreign professionals in tech and engineering. Canada should follow suit by designing bold policies that retain and attract digital entrepreneurs.

Proposals like the Canadian Entrepreneurs Incentive and increased small business tax exemptions could help reverse this trend. Rather than increasing capital gains taxes, policymakers should support risk-takers driving the new economy.

Stablecoins: The Missed Opportunity

Stablecoins represent one of the most accessible, impactful tools in the digital asset landscape. They offer low-cost, real-time global payments and unlock financial inclusion through programmable money. Countries with forward-looking policies are using stablecoins to modernize cross-border finance.

Yet in Canada, regulatory bodies have thrown up roadblocks. The Canadian Securities Administrators (CSA) have misclassified many stablecoins as securities, leading to overregulation and restricted access for Canadians. Even worse, the country has missed an opportunity to globalize the Canadian dollar through a CAD-denominated stablecoin.

Other jurisdictions have figured out how to manage risks without stifling innovation. There is no reason why Canada, home to some of the world’s most sophisticated financial infrastructure, can’t do the same.

Crypto Banking: A Necessary Next Step

Canadian crypto businesses still face enormous challenges in accessing basic banking services. Despite adherence to Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations, many are denied accounts, loans, and even payment processing.

Banks in countries like Germany, Singapore, and the U.S. have already found ways to work with vetted blockchain companies. Canadian banks must follow suit, or risk missing out on an emerging sector that is fast becoming mainstream.

Is There Hope For Change?

So far, the Liberal government’s approach to crypto has ranged from passive to dismissive. Whether Solomon’s appointment signals a shift remains to be seen.

But one thing is certain: if Canada wants to stay relevant in the digital economy, the time to act is now.

FAQ

Why is Canada behind in crypto adoption?
A lack of regulatory clarity, limited political interest, and restrictive policies on stablecoins and crypto banking are key factors.

How can Canada retain tech talent?
By offering targeted tax incentives, improving startup funding access, and celebrating rather than penalizing entrepreneurial risk.

What are stablecoins and why do they matter?
Stablecoins are cryptocurrencies pegged to fiat currencies like USD or CAD, enabling fast, cheap, and programmable global payments.

Are other countries ahead in crypto regulation?
Yes. Countries like the U.S., Germany, and Singapore have implemented balanced frameworks that attract capital while managing risk.

What role do Canadian banks play in this issue?
Banks have been reluctant to serve crypto businesses, despite similar institutions abroad finding compliant ways to engage with the sector.