Cryptocurrencies are one of many dividing lines between the Liberal and Conservative parties of Canada. In 2022, Conservatives advocated for crypto as a way to “opt out” of inflation, blaming Liberal economic policy for driving inflation to 30-year highs and contributing to a spike in housing costs.
Liberals, on the other hand, criticized crypto for being too volatile.
Most of the time, cryptocurrencies are treated as securities, which makes developing a crypto-focused business in Canada difficult. This protective approach is seen by Conservatives as harmful to the country’s economic and technological development.
Then-Finance Minister Chrystia Freeland criticized Conservative Party Leader Pierre Poilievre’s pro-crypto stance after the 2021 bull run shifted into a bear market. She said:
“Let’s talk about some really terrible advice that was offered to Canadians in the spring by the Conservative leader. He urged Canadians to invest in crypto as a way to opt out of inflation. Now, bitcoin has crashed by 21 percent over the past week and by more than 65 percent since the Conservative leader first gave Canadians that reckless advice.”
She added that the Conservatives should apologize for pushing a policy that left many Canadians bankrupt.
Poilievre has supported allowing Canadians to use cryptocurrencies alongside dollars, believing that crypto can preserve value in periods of high inflation. His goal is to change the legal classification of cryptocurrencies from securities to commodities.
He views crypto as a positive force that can decentralize the economy. He has vowed to make Canada the “blockchain capital of the world” since 2022 — two years before U.S. President Donald Trump made a similar promise about the U.S. That same year, Calgary Nose Hill MP Michelle Rempel Garner introduced the Canadian cryptocurrency initiative.
Garner’s initiative
Bill C-249, introduced by Garner in 2022, aimed to kickstart communication between the Minister of Finance and cryptocurrency developers and entrepreneurs to establish a legal framework for crypto regulation. The bill sought to ease entry into the sector and foster a healthy legal environment for innovators.
While advocating for the bill, Garner argued that Canada lost talented individuals due to a lack of government support and restrictive crypto laws.
Although the bill was well-received by Canadian crypto innovators and the Conservative Party, it was ultimately defeated in its second reading in the House of Commons.
Trump enters the scene
Trump’s remarks about turning Canada into the 51st state of America helped solidify older voters’ support for the Liberal Party. Prime Minister Mark Carney was seen as the politician best suited to protect Canada’s interests in any negotiations with its southern neighbor. Meanwhile, the Conservatives focused on domestic issues like inflation and out-of-control housing costs.
The end result was a surprising shift in Canada’s political landscape. Young voters unexpectedly flocked to the Conservative Party while the older generation, whose top priority, according to many polls, was “dealing with Donald Trump”, formed a large enough voting bloc to hand Carney a victory.
Other factors also contributed to Carney’s victory, including the Green Party banning many candidates from running in the election to avoid splitting the vote with the Liberals. Also, Conservative support in the key province of Quebec ranked the lowest in all of Canada heading into the election.
In his victory speech on April 29, Carney said, “We are over the shock of the American betrayal, but we should never forget the lessons.” Trump, for his part, did not appear concerned about the Liberal victory and commented that he and Carney are “going to have a great relationship.”
In the U.S., USD-pegged stablecoins are widely recognized as drivers of the dollar’s global strength. This is largely because popular stablecoins are typically backed by U.S. Treasury bonds. In 2023, USDC issuer Circle removed Treasury bonds from its reserve in 2023.
Given that Conservatives were promoting stablecoins as a tool to protect Canadians from inflation, the Liberal Party’s stance can be seen as a move toward greater independence from the U.S. Moreover, their positive view of central bank digital currencies aligns more closely with the European model. In contrast, the Trump Administration in the U.S. halted work on CBDCs over privacy concerns.
The future of the crypto sector under Carney
Overall, the Liberal Party is not fond of cryptocurrency. On many occasions, the high-profile party members, including Trudeau and Carney, made skeptical and even fierce remarks about cryptocurrencies.
Carney named Bitcoin’s low network capacity as one reason it won’t work as a mass means of payment. According to Carney, the price volatility makes crypto a bad store of value.
As a former head of the Bank of Canada and Bank of England, Carney trusts centralized financial institutions. He believes CBDCs are superior to stablecoins because they offer greater regulatory control.
It does not appear that the Liberal Party will change its stance on crypto anytime soon. As a result, crypto advocates will face an uphill battle in Canada over the next four years.
