The oil and gas province, which prides itself on its business history, now advertises its ambition to become a North American hub for companies trading and offering services related to Bitcoin, Ethereum, Dogecoin and other digital assets. In a speech to the provincial throne last month, the Alberta UCP government announced its intention to pass legislation aimed at “promoting innovation” in the financial services sector by allowing companies to try new products and services. The throne speech also cited future legislation that would consolidate Alberta’s reputation as a “modern power plant and magnet for investing in emerging technologies such as data storage and cryptocurrencies.”
An established industry
While the details of any upcoming legislation have not yet been revealed, Labor Secretary Doug Schweitzer said in a recent interview that companies operating in the crypto area have shown “tremendous interest” in the province in recent months. “It’s still very much in Alberta,” Schweitzer said. “But I think there is an opportunity for Alberta to play a leading role in Canada by 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 businesses in various locations across the province. The supercomputers used to mine Bitcoin and other cryptocurrencies require huge amounts of low-cost energy to be economical, so miners are often attracted to Alberta’s liberalized electricity system and abundant gas supply. In addition to mining, the province also hosts an increasingly wide range of other cryptocurrency-related companies, from those specializing in the safekeeping and storage of digital assets, to manufacturers of cryptocurrency mining equipment, such as immersion coolers. Edmonton-based company Bitcoin Well is working to make it easier for regular consumers to use cryptocurrencies, with a variety of services, including a network of more than 200 Bitcoin ATMs in Canada.
Open the welcome mat
“I would say that Alberta is almost unique, from what we have seen, in terms of how focused it is on attracting innovative financial technology companies,” said Emile Scheffel, vice president of Brane Inc., which recently selected Calgary as its headquarters. of its new subsidiary, Brane Trust. Brane Trust will provide secure custody of digital assets such as Bitcoin and Ethereum to institutional clients such as banks and asset managers who either manage cryptocurrencies or seek to expand their services to cryptocurrency services. But setting up the business at Brane’s Ontario headquarters proved to be regulatoryly difficult. It would take up to two years to get the necessary regulatory approvals, while Alberta released the welcome rug, Scheffel said. “When we first contacted Alberta regulators about our ambitions, they already knew about cryptocurrencies – they had the know-how to be able to do that,” he said.
Defying the definition
Brian Mosoff – CEO of Toronto-based Ether Capital, which helped launch the first Bitcoin ETF last year with Purpose Investments – said cryptocurrency companies face many regulatory challenges. In Canada, it is not yet clear what kind of assets are actually digital currencies.
“Are they commodities? Are they securities?” said Mosof. “We do not even have an exchange that can compete internationally.”
Cryptocurrencies are big business, but for many who do not own the technology, it is still a big unknown. Here are answers to some questions you may have. 2:31
Globally, cryptocurrencies are already a multi-trillion-dollar asset class, Mosoff said, so any jurisdiction that can think outside the box and create a regulatory framework that does not repel these types of businesses can benefit.
Schweitzer has shown Alberta’s desire to develop a “regulatory sandbox” for encryption companies interested in settling in the province.
“It’s about creating a culture and environment for all these groups of people (cryptocurrency-inspired) to migrate to this jurisdiction,” Mosoff said. “Either because they think it is tax or regulatory advantageous, or because they think they can experiment with things without throwing the book away.”
Modern Mining is an Alberta-based Bitcoin mining company currently building its first mining facility near Medicine Hat, in the southeast corner of the province.
Sebastian Elawny, chief legal officer of Modern Mining, acknowledged that there had been an increase in interest in the province from cryptocurrencies last year, but said this was largely due to China’s repression of the industry.
Modern Mining’s CFO, Ryan Chernesky, right, and CLO Sebastian Elawny, part of the company’s bitcoin mining equipment in Calgary. (Jeff McIntosh / The Canadian Press)
“Suddenly, there were hundreds of thousands of miners who had to find new homes,” he said.
However, Elawny said U.S. destinations such as Miami and Texas remain much more attractive to the industry. Although he said the Alberta electricity market is an advantage, the province has a long way to go if it really wants to be a leader in the field of encryption.
He cites the Alberta coal pricing system as a disincentive to the electricity-consuming cryptocurrency industry, as well as the challenges that cryptocurrency companies may face in securing funding.
“It’s still very difficult to get a bank account if you’re an encryption company in Alberta,” Elawny said.
“We are facing a lot of challenges right now as a company trying to operate in Alberta and we as a group are really exploring our options outside of Alberta because we are already behind.”
