If desperation actually does reek, it would smell like Trudeau’s boneheaded u-turn on digital assets.
What do the Liberals care more about than dealing with an impending recession?
That would be their polling numbers, which are presently deep in the toilet.
With the cost of living continuing to rise at a historic pace, Justin Trudeau’s scandal plagued, long in the tooth Liberals are desperately groping to find a life raft to pull their numbers up against a surge of popularity for newly elected Conservative leader Pierre Poilievre.
Liberal House Leader Mark Holland perfectly illustrated this when he recently took a shot at hundreds of thousands of Canadians who participate in a fast growing sector of the Canadian economy, the digital asset industry.
The Liberal’s sudden antipathy towards the digital asset industry came as a surprise to many observers of the broader digital economy in Canada, because over the years the Liberals have attempted to talk a good game on this file. Think Justin Trudeau waxing eloquent about quantum computing and hundreds of millions of dollars pumped out the door for so-called digital economy “super-clusters”. Jobs in the digital asset industry are the exact types of tech jobs the Liberals have been hot to see created, particularly when looking at diversification beyond natural resources jobs and Canada’s faltering economy.
Holland’s comments came in the context of discussing a private members bill which was written by yours truly. The goal of the bill is to ensure Canada is an attractive place to attract and retain investment and talent in the digital asset industry. It aims to do this by creating investment certainty by having industry experts provide direct input into a harmonized regulatory framework that could be used to provide much needed protections for both investors and consumers.
The Liberal’s decision to vilify the digital asset industry as a whole comes as Conservatives have taken the lead on developing policy to grow it. Policy differences on how to approach things like regulations are normal in politics, but that’s not what the Liberals are doing. Instead of stating their support for growing web3 based assets and technologies and then suggesting their own approach to things like regulations, the Liberals are choosing to demonize an entire industry with hopes of moving their polling numbers up by a couple of points.
This posture will backfire, for several reasons.
First, when it comes to the digital asset industry, the toothpaste is out of the tube. The Liberal’s newly minted, post-Poilievre-win posture that suggests that “digital assets are bad” is somewhat akin to suggesting that everyone throw out their smartphones and revert to using typewriters because the Liberals now believe that computer chips are evil. Web3 technologies are foundational. They are already pervasive and have disrupted many different processes and industries. They will continue to do so in the future.
Second, doing things that could reduce the positive economic impact of the digital asset ecosystem ahead of a looming recession is a boneheaded move. A three year old industry report found in survey data that the average salary for a blockchain worker in Canada was nearly double the Canadian national wage average. Another 2019 report found that the blockchain ecosystem in Canada employed about 1600 people with over 280 companies. Given this data is already several years old, and global trends indicated that "blockchain developer" is stated as the top emerging job with 33x growth over the previous year, it would be hard for the Liberals to suggest the economic impact of this industry is on a downward trend.
The third reason the Liberal’s new digital asset hating posture will backfire is because it’s hard for them to say they’re against something they’ve already thrown tax dollars at. They have already provided millions of dollars of direct contributions to the space, including cryptocurrency trading platforms. This includes a large amount of funding for a crypto trading platform in Chrystia Freeland’s own riding. The Liberal’s most recent federal budget proposed $17.7 million dollars for a review focused on the digitalization of money, including cryptocurrencies. And, in 2018 the government even launched a trial use of Ethereum’s blockchain to publish government funding information.
Fourth, the new Liberal “we hate digital assets” topline directly undermines their supposed support for economic diversification, particularly in Western Canada. According to a 2019 report by Canada’s Chamber of Digital Commerce, “approximately 37% of all Canadian blockchain activities take place in Western Canada”. The Government of Alberta has also been embracing the jobs and innovation that the blockchain sector can bring to the province, as evidenced by recent legislation.
But the digital asset industry doesn’t just affect Alberta. The same industry report noted that “the highest concentration of blockchain activity is in Ontario (52%)”. Ontario has always been a vote rich province that the Liberals have targeted to hold power. It would make sense to support a sector that has a growing rate in both these parts of Canada.
Fifth, a number of Liberal MPs hold digital assets themselves. If digital assets are the devil the Liberals claim them to be, why does the Parliamentary Secretary to the Minister of Finance’s ethics disclosure list them as family assets?
And finally, the Liberal’s original position on my bill was supportive, which suggested their caucus was originally open to supporting it. “I first want to highlight the benefits that cryptocurrency has on Canada's economic growth and the future of money in our country”, and “there are undeniable benefits to cryptocurrency, and the hype to invest is certainly growing.” was the original position the Liberals took in their response speech when the bill was last debated. I doubt the entire Liberal caucus, with Trudeau’s personal polling numbers in the toilet, are dumb enough to think demonizing a growing sector of the Canadian economy is a genius political move that will somehow save their seats.
So the Liberal’s posture on this should not be that “digital assets are bad” but rather, how to protect investors and consumers such that there is a clear and stable investment climate in the country. This is an industry that can and should grow in our country, under the auspices of a framework that provides clarity on the rules of engagement. That is the position my bill takes, and is also what our new party leader put out as a platform during the leadership race.
In short, legislators should be debating how to grow this sector while providing protections for investors and consumers, not attempting to vilify an entire industry for cheap political gain.
Earlier this month the Queen’s funeral precipitated a change in the private member’s bill reading schedule that caused me to trade my bill to a later date. Given the Liberal’s boneheaded change in posture, this change in timing proved to be fortuitous. I intend to push my bill back to a later date to convince colleagues from all political parties that vilifying an entire industry as opposed to putting forward policy that could create jobs and consumer protections is a very dumb thing to do. I know there are many people who work in and create jobs in this industry who will be trying to do the same.
Hope springs eternal, but Liberals usually fail.