Canada is home to some of the biggest names in crypto on the world stage, both famous and infamous. Russian-Canadian Ethereum inventor Vitalik Buterin, fallen Binance kingpin Changpeng Zhao and “Dogefather” Elon Musk are all Canadian citizens. Meanwhile, within our borders, a small group of dedicated people has been hard at work laying the foundations for the role Canada will play as the digital assets economy matures and professionalizes.
In 2021, Canadian securities regulators embarked on an ambitious mission to bring the crypto industry into compliance, telling crypto-trading platforms to choose between starting the registration process or exiting the country. With that mission largely complete, regulators are now turning their attention to stablecoins, tokens whose value is typically pegged to the U.S. dollar and that are systemically important to crypto markets. The broad outlines of Canada’s allow-with-oversight approach to regulating crypto have taken shape, providing industry clarity and contrasting the enforcement-first approach south of the border.
With regulatory clarity and growing signs of interest from traditional finance players like BlackRock and TMX Group, many in the sector are convinced we’re in the early days of a “crypto spring.” Here’s a look at some of the key players shaping Canada’s role as the industry warms up.
The heads of Canada
Mark Greenberg (Kraken), Lucas Matheson (Coinbase)
For years, major international crypto-trading platforms continued quietly offering crypto-trading services in Canada in the midst of a regulatory crackdown—much to the frustration of their domestic competitors who had already gone through the process of registering as securities dealers. Today, a number of those platforms have exited Canada, rather than deal with the cost and headache of compliance to operate in a relatively small market.
Delaware-incorporated Coinbase and Kraken have taken a different approach. The two platforms have signed agreements to follow certain rules while pursuing registration and have been loudly pledging their commitments to Canada. Mark Greenberg and Lucas Matheson, who head up Canadian operations at Kraken and Coinbase respectively, have each been in their positions for about a year.
In November, Matheson hosted a splashy party for about 200 people in the crypto sector at Shopify’s office in Toronto’s fashion district, featuring fireside chats with Coinbase CEO Brian Armstrong, Shopify CEO and Coinbase board member Tobi Lütke and Ontario Securities Commission CEO Grant Vingoe. Coinbase and Kraken had big presences at Toronto’s Blockchain Futurist conference in August for the first time.
Both Greenberg and Matheson previously worked in traditional finance. In interviews with The Logic, they both said that experience inspired them to move into crypto and help address some of the problems with the financial system through innovation.
Coinbase and Kraken have both run afoul of the U.S. Securities and Exchange Commission, but Matheson and Greenberg are quick to praise Canada’s regulatory approach. “Canada is at a really interesting moment in our evolution of digital economy,” Matheson said. “You don’t have to look much further than Canada, if you’re the SEC, to see a path under an existing regulatory regime that actually works,” said Greenberg.
The advocate
Lori Stein (McCarthy Tétrault)
Lori Stein was working as a lawyer in the investment management industry for the law firm Osler, Hoskin & Harcourt when a senior partner connected her with an interesting file. The client was Toronto-based crypto fund manager 3iQ and the firm was trying to get a novel product approved—a Bitcoin fund, which would provide Canadian investors with the world’s first regulated exposure to the digital asset.
Stein had a combination of experience that would serve the file well. She had previously done legal work for the hedge fund industry and worked with regulators on getting approvals for financial products that required a high level of technological savvy.
“I had capacity to learn this new stuff,” Stein said in an interview. “And I had a need to distinguish myself and go in a different direction.”
In 2019, thanks in part to Stein’s work, the Ontario Securities Commission released a decision that paved the way for 3iQ to offer the fund, one of many world firsts in crypto for the regulator. Stein also worked on Wealthsimple’s 2020 registration to become the first company to operate a compliant crypto-trading platform in Canada, a groundbreaking decision that paved the way for the current regulatory regime.
Today, Stein is co-head of McCarthy Tétrault’s Fintech Group and a leading lawyer in the sector. She’s worked with both large international crypto companies and small Canadian startups, helping them make sense of—and sometimes shape—a constantly evolving regulatory environment.
Stein said she prefers the crypto sector to legal work in traditional capital markets because of the opportunity for critical thinking and shaping entirely new strategies. “I love what I do, and I care about it so much,” she said.
The connector
Brian Mosoff (Ether Capital)
Brian Mosoff straddles two worlds. As an early investor in Ethereum, he spends a lot of time attending hackathons and hanging out with crypto developers who are suspicious of anyone wearing anything more formal than a hoodie. As outgoing CEO of Ether Capital, a Toronto-based publicly traded company that invests in and stakes Ethereum’s native cryptocurrency, he spends a lot of time hanging out with Bay Street professionals and regulators. Mosoff sees a lot of value in connecting the two crowds, but pulling it off is a challenge.
Mosoff addresses this through a time honoured technique: Throwing great parties. Living in a fabulous setting for them doesn’t hurt. Mosoff’s midtown Toronto condo—which features three bedrooms, two storeys, a stunning view of the city and a private pool on a rooftop terrace—is the place to watch the people to watch in Canadian crypto.
“It’s been interesting to exist in these two worlds and seem like you fit into both groups of people, and make sure that you’re doing what’s appropriate to have the respect of each group,” Mosoff said. “The condo, in a way, has been this blending of these two things, and trying to act as that bridge.”
Mosoff said his favourite moments happen late at night among small groups. That’s when people really start to connect, open up and solve problems, he said. “You get a lot of insight into the people who are at the centre of the onion.”
Earlier this week, Ether Capital announced Mosoff will step down as CEO. Mosoff said he’s unsure what his next role will be, but he plans to continue in his unofficial position as Canadian crypto’s social glue. “That’s something I’m proud of,” he said.
The founder
Jelena Djuric (Noble)
Jelena Djuric was working at Toronto’s Informal Systems, a company linked to the Cosmos network of interconnected blockchains, when the Terra stablecoin collapsed. The failure of the digital asset sparked contagion and a prolonged bear market throughout the crypto sector, but had a particularly heavy impact on Cosmos.
Developers built Terra using Cosmos software and it was a widely used stablecoin throughout the ecosystem. Stablecoins track the value of a real world asset, typically the U.S. dollar, and are systemically important to decentralized finance, which is currently the principal use case for Cosmos. The protocol needed a new stablecoin, but the major ones weren’t compatible.
Djuric, 29, decided to solve the problem herself. Her company Noble, has raised a US$3.3 million seed round and partnered with Circle to create a blockchain that has brought US$46.6 million worth of the stablecoin USDC to Cosmos to date. Noble hopes to eventually bring other assets to Cosmos as well.
This isn’t the first time Djuric has spotted a problem and launched an organization to solve it. She’s also a co-founder of the Canadian Web3 Council, an industry group formed in 2022 to advocate for the sector as lawmakers grapple with regulating the complex and controversial asset class.
“I never really set out to be a founder,” Djuric said. But, “if there’s a very obvious thing to be done, and it hasn’t been done yet, you might as well just go ahead and do it.”
The thinker
Ryan Clements (Alberta Securities Commission)
Seven months before Terra collapsed, Ryan Clements was a professor at the University of Calgary and sounding the alarm bell about it. In his presciently titled “Built to Fail: The Inherent Fragility of Algorithmic Stablecoins,” Clements argued uncollateralized stablecoins like Terra are fundamentally flawed and prone to failure.
The paper made Clements a go-to source for global publications trying to make sense of the crypto crash. He also became a go-to source for Canadian regulators, policymakers and inquiries realizing they could no longer simply shake their heads and say they just don’t understand this crypto thing.
In October 2022, the emergency commission tasked with examining the federal government’s decision to declare a public emergency during the convoy protests over COVID-19 restrictions assigned Clements the job of writing a report explaining what cryptocurrencies are and how they’re regulated. Canada had cracked down hard on people who had used Bitcoin to fundraise for the protests despite wide-ranging restrictions on the financial system.
Clements published another paper in June 2022 laying out his case for how Canada should regulate stablecoins, arguing securities regulators “have a reasonable case for legal jurisdiction over stablecoins based on how they are currently used.” In February 2023, Canada’s securities regulators announced they believe stablecoins “generally meet the definition of ‘security’” and started a crackdown on platforms offering them to Canadians.
Recently, Clements left full-time academia for a job as a full-time director with the Alberta Securities Commission, where his responsibilities include helping regulators implement that crackdown. He declined a request for an interview, saying he’s unable to speak with the media about ongoing regulatory issues in his new position.
In a previous interview with The Logic, Clements pushed back on the idea that regulation threatens innovation, a common refrain from the crypto industry. “One of the challenges in not having rules in place is the industry doesn’t know what to do,” he said. “You could equally argue that not knowing the rules kills innovation.”
The politician
Michelle Rempel Garner (Calgary MP)
Just last year at a committee studying the convoy protests, members of Parliament were asking crypto companies rudimentary questions about the difference between a bank account and a crypto wallet. Meanwhile, Conservative Calgary MP Michelle Rempel Garner was showing up at crypto conferences, engaging with the industry via DMs and wonking out with crypto-friendly economist Glen Weyl.
Conservative leader Pierre Poilievre may be Bitcoin-friendly—once suggesting, as the Liberals are fond of reminding him, that Canadians could “opt out of inflation” by buying the digital asset. But Rempel Garner is known as the MP who gets crypto on a deep level.
In February 2022, hot on the heels of the convoy protests that moved crypto regulation up the list of priorities for policymakers, Rempel Garner presented a private member’s bill that would require the finance minister to come up with a framework to encourage the growth of crypto assets in Canada, and to do it in consultation with people who have sector experience. The bill ultimately failed, but Rempel Garner said she believes it had “the intended effect of spurring a conversation.”
“There are more parliamentarians than there were five years ago who I think have a pretty good understanding of the space across party lines,” she said.
Rempel Garner is now co-chairing a parliamentary caucus on emerging technology, which will study policy and issues around artificial intelligence, Web3 and other nascent sectors. Lawmakers can use the meetings of the new caucus to learn about and discuss the risks and rewards of such technologies and how other countries are addressing them.
Rempel Garner said she’s concerned about the political polarization that has developed around blockchain technology. In the U.S., especially, crypto has increasingly become associated with Republicans, while its critics tend to be Democrats.
“That’s problematic, because it’s not going anywhere,” she said. “It’s only going to continue to grow.”
The coder
Robin Gautier (LayerZero)
Robin Gautier was a nuclear physicist, which he says was not as exciting as it sounds. Programming was his favourite part of the job, and he wanted to change careers to focus on it. So he moved his young family from France to Montreal, then Vancouver, thinking Canada would be a better place to find work as a software engineer without a computer science degree. In 2021, he got his first crypto job working for Coinbase, a field he had long been interested in.
“I want to be in a place where we do real engineering, where we have a lot of creativity, and we’re building new things,” Gautier said.
In Vancouver, his wife became friends with the wife of LayerZero CEO Bryan Pellegrino. After some deep talks about the crypto world, Gautier joined the team.
LayerZero’s technology aims to make it easier for blockchains to share assets and communicate with each other. Blockchains are like apps on a smartphone—they can’t share data or communicate with each other easily and smoothly. LayerZero—along with a handful of other companies and protocols, some of which are based in or have strong links to Canada—is aiming to change that.
One of LayerZero’s distinguishing features is that it lets software developers choose their own approach to cybersecurity, rather than using a one-size-fits-all approach for both small transfers of NFTs and huge transfers of crypto assets worth billions of dollars. As head of LayerZero’s backend engineering team, Gautier helped put that idea into practice.
The approach has attracted some criticism, but venture capitalists like what they see at LayerZero, investing US$120 million in the company at a US$3 billion valuation in April. Gautier said he enjoys working on something that may have a big impact on how the sector develops. “It feels like we are at the birth of the internet.”
The central banker
Dinesh Shah (Bank of Canada)
Dinesh Shah, director of fintech research at the Bank of Canada and head of the team researching the technology behind a possible central bank digital currency, wants to emphasize that it’s just a possibility. In a 20 minute interview, he used the phrase “way, way too early” twice. Maybe, if the government (not the central bank!) gives it the green light, perhaps, Shah’s work will go live.
If it does, Shah will have had a significant hand in a fundamental change to our monetary system. Shah chooses his words carefully when he talks about the project, but admits to finding it “intellectually interesting.”
“We’re dealing with a set of questions here that are really quite hard,” he said. “This could potentially make a real difference to many people.”
The Bank of Canada has said there is currently no compelling case for a central bank digital currency, or CBDC—a digital form of the Canadian dollar. However, the organization is keeping its eye on two scenarios that might change that—a significant decline in the use of cash, or a significant increase in the use of non-central bank-issued cryptocurrencies.
Shah’s job is to get the Bank of Canada ready in case one of those scenarios comes to pass. He described the project as being in a similar stage to designing a car’s chassis. “We don’t want to be focusing on the shape of the headlights and that kind of stuff,” he said.
The central bank recently released the results of a survey that showed 86 per cent of respondents from the general public have a negative view of a possible CBDC because of privacy, government overreach and other concerns. The term has become politicized, with some U.S. states—and opposition leader Poilievre—pledging to ban CBDCs or prevent them from being issued.
Shah noted the survey respondents don’t necessarily represent the views of the general population, since people with strong opinions would have been especially motivated to respond. However, he said it would be a mistake to dismiss their concerns.
“It’s really important to be listening to people,” he said. “Not understanding people’s concerns is a sure way to a disaster.”
The artist
Mitchell F. Chan
The concept of selling art as NFTs provokes a negative emotional reaction in a lot of people. You’re asking me to spend money on a JPEG? And the token is just a pointer to the artwork—the work itself isn’t even on the blockchain? And anybody with crypto know-how could make a squiggle in Microsoft Paint, put it up for sale on OpenSea, start the bidding at US$2 million and have a shot at actually making the money?
To all of this, Toronto-based artist Mitchell F. Chan says: Yes! Isn’t it great?
“Artists have had a long, illustrious history of selling absolutely nothing,” Chan said. “We got there first. Eat your heart out, Satoshi.”
Chan’s 2017 NFT work, Digital Zones of Immaterial Pictorial Sensibility, references a similarly named work by French artist Yves Klein, who sold the immaterial space in an empty gallery he claimed was imbued with the sensibility of the colour blue in exchange for gold, which he threw into the River Seine. Chan instead imbued blank digital space on a website with “the hazy, muted blue” of a Prince Edward Island horizon, “on a clear day, roughly three hours before civil twilight,” selling tokens representing the digital zones in exchange for Ether.
Chan said the art world didn’t quite get it back then, but four years later, everything changed. In March 2021, digital artist Beeple sold an NFT of his work for US$69 million. Chan released one through the Art Blocks platform, which at the time was regularly selling NFT projects for millions. Through a combination of original sales and royalties from resales, Chan estimates he made several million dollars from NFTs in 2021.
No one is selling squiggles for millions of dollars any more, but Chan is still releasing NFT art. In August, he released an online game called The Boys of Summer, which is tied to an NFT collection of a series of baseball players and explores the societal impact of reducing our lives to data.
“As many problems as digital ownership can [create] in terms of fuelling speculative bubbles, ownership is actually still a really important part of artwork,” Chan said. “I continue to make artwork about digital technology and as long as I do, NFTs will be the best way to distribute and sell it.”
