CALGARY – Cryptocurrency has been described by some observers as a “Wild West,” so it’s no surprise that of all the Canadian provinces, Alberta is the one that’s aiming to become a North American hub. for industry mavericks.
The oil and gas-producing province that is proud of its entrepreneurial history is now touting its ambition to become a North American hub for companies that trade and offer services related to Bitcoin, Ethereum, Dogecoin and other currencies. other digital assets.
In the province’s Speech from the Throne last month, Alberta’s UCP government declared its intention to introduce legislation to “promote innovation” in the financial services sector by allowing companies to test new products and services.
The Speech from the Throne also mentioned future legislation that will cement Alberta’s reputation as “a modern powerhouse and magnet for investment in emerging technologies like data storage and cryptocurrency.”
While details of any upcoming legislation have yet to be revealed, Employment Minister Doug Schweitzer said in a recent interview that companies operating in the crypto space have shown “tremendous interest” for the province in recent months.
“It’s still in its infancy in Alberta,” Schweitzer said. “But I think Alberta has the opportunity to play a leadership role in Canada in creating a home for these venture capital firms.”
Alberta has already established itself as an attractive destination for cryptocurrency miners, who have set up a number of operations at various locations in the province. (The supercomputers used to mine bitcoin and other crypto tokens require large amounts of cheap energy to be economical, so miners are often drawn to Alberta’s deregulated electricity system and plentiful supply. in natural gas).
Beyond mining, the province is also increasingly home to a wide range of other cryptocurrency-related businesses, from those specializing in the custody and storage of digital assets to manufacturers of crypto mining equipment like immersion cooler containers.
“I would say that Alberta is almost unique, from what we’ve seen, in terms of the importance it places on attracting innovative fintech companies,” said Emile Scheffel, Vice President of Brane Inc., which recently chose Calgary as the headquarters for its new subsidiary, Brane Trust.
Brane Trust will provide secure custody of digital assets such as Bitcoin and Ethereum for institutional clients such as banks and asset managers who manage cryptocurrencies or are looking to expand their services into cryptocurrency services.
But establishing the company in the home port of Brane, Ontario has proven difficult from a regulatory standpoint. Securing the necessary regulatory approvals would have taken up to two years as Alberta rolled out the welcome mat, Scheffel said.
“When we first contacted regulators in Alberta about our ambitions, they already knew about cryptocurrency – they had the expertise to be able to do this,” he said.
Brian Mosoff – CEO of Toronto-based Ether Capital, which helped launch the world’s first Bitcoin ETF last year alongside Purpose Investments – said cryptocurrency companies face many challenges in from a regulatory point of view. In Canada, there is not even clarity yet on what kind of assets digital currencies really are.
“Are they commodities? Are they titles? Mosoff said. “We don’t even have an exchange that can compete internationally.”
Globally, cryptocurrency is already a multi-trillion asset class, Mosoff said, so any jurisdiction that can think outside the box and create a regulatory framework that doesn’t repel these types of businesses will benefit from it. (Schweitzer indicated Alberta’s willingness to develop a “regulatory sandbox” for crypto companies interested in setting up shop in the province).
“It’s about creating a culture and an environment for all these groups of people inspired by (cryptocurrency) to migrate to this jurisdiction,” Mosoff said. “Either because they think it’s favorable in terms of taxation or regulation, or because they feel they can experiment with things without getting the book thrown at them.”
Modern Mining is an Alberta-based bitcoin mining company currently building its first mining facility near the city of Medicine Hat in the southeast corner of the province.
Sebastian Elawny, chief legal officer of Modern Mining, acknowledged there had been a surge of interest in the province from crypto companies over the past year, but said that was largely due to China’s crackdown on industry.
“All of a sudden there were hundreds of thousands of mining rigs that needed to find new homes,” he said.
But Elawny said US destinations like Miami and Texas remain much more attractive to the industry. Although he said Alberta’s electricity market is a strength, the province still has a long way to go if it really wants to be a leader in crypto.
He names Alberta’s carbon pricing system as a deterrent to the power-hungry crypto industry, as well as the challenges cryptocurrency businesses can face in obtaining funding.
“It’s even very difficult to get a bank account if you’re a crypto business in Alberta,” Elawny said. “We are currently facing many challenges as a business trying to operate in Alberta, and we as a group are actually exploring our options outside of Alberta as we are already falling behind. “
This report from The Canadian Press was first published on March 27, 2022.
Amanda Stephenson, The Canadian Press