While countries across the globe are rapidly integrating digital assets into their financial ecosystems, Canada is falling dangerously behind—costing the country valuable capital, talent, and global competitiveness.
Regulatory Uncertainty Is Driving Away Innovation
Since the last federal election, Canada has offered little clarity on its direction in digital asset innovation. None of the major political parties addressed crypto in their campaign platforms, despite the sector’s growing relevance. This silence contrasts sharply with regions like the U.S., Europe, and Asia, where regulators are aggressively moving toward regulatory clarity and innovation enablement.
A recent report from the Canadian Venture Capital and Private Equity Association (CVCA) highlights the fallout: Canadian seed-stage investment has fallen to pandemic-era lows in Q1 2025, suggesting early-stage crypto and fintech innovation is being stifled.
The Brain Drain Problem Is Getting Worse
Despite Canada’s reputation for world-class research institutions—including the Vector Institute in Toronto and MILA in Montreal—tech talent is fleeing. An estimated two-thirds of software engineering graduates leave Canada, often citing restrictive tax policies and limited startup support.
Other countries are doing more to attract and retain tech talent. For example, Portugal offers tax relief to foreign professionals and young workers in emerging sectors like blockchain and engineering. Canada, by contrast, has proposed increased capital gains taxes, which only discourages entrepreneurship.
To reverse this trend, Canada needs targeted incentives like small business tax exemptions and a broader Canadian Entrepreneurs Incentive to retain and empower its digital innovators.
Stablecoins: A Missed Economic Opportunity
Stablecoins—digital assets pegged to fiat currencies—are transforming global payments. They make transactions faster, programmable, and dramatically cheaper than traditional banking methods. However, Canadian regulators continue to restrict access, with the Canadian Securities Administrators (CSA) wrongly classifying them as securities.
This not only limits innovation but also blocks an opportunity to introduce a Canadian dollar-backed stablecoin, which could enhance global trade and boost the relevance of the Canadian dollar internationally.
Crypto Businesses Still Lack Basic Banking Access
Crypto companies in Canada still struggle to access basic financial services—from bank accounts to credit cards—despite having robust Anti-Money Laundering (AML) practices. Meanwhile, G7 counterparts with similar regulations have found ways to de-risk crypto and support innovation.
Without access to banking, Canadian crypto startups remain stunted while international competitors race ahead with new financial products in payments, lending, and digital finance.
Time for a New Approach
The appointment of Evan Solomon as Minister of Artificial Intelligence and Digital Innovation is a signal of change, but unless backed by bold policy moves, it may amount to little. Canada must decide if it wants to be a global leader or a bystander in the digital asset economy.
Without immediate action, Canada risks becoming a spectator in one of the most transformative financial revolutions of the century.
