Regulators are keeping Canada from being a blockchain leader, expert says

Analyst and author William Mougayar is calling out the Ontario Securities Commission and the Canadian Securities Administrators for stalling on the cryptocurrency market and in the process stifling Canadian investment and entrepreneurship in the Internet revolution known as blockchain.

In an open letter to the OSC and CSA, Mougayar, author of The Business Blockchain and general partner at Virtual Capital Ventures, argues that the burgeoning technology behind Bitcoin and Ethereum is already changing the way business takes place around the world, yet Canada is being set up to be an industry laggard due to an inhospitable regulatory environment.

“Let us not kid ourselves. Canada is not a leader in the emerging blockchain market, despite having the potential of being one” writes Mougayar. “The reality is that Canadian companies have not been able to easily participate in this new wave of wealth creation in large part due to the regulatory obscurity around compliance requirements from the OSC and the CSA, the two powerhouses that govern this regulatory field.”

Mougayar says that regulators have been too quick to write off cryptocurrencies as risky ventures in need of high compliance to protect the public from unstable investments. “Undue emphasis on consumer protection alone also stifles reasonable consumer choice and potential benefits,” writes Mougayar. “Instead of sending warnings and fears, why not clarify your positions and be clear on what is allowed?”

Cryptocurrencies are not evil and are not for money launderers and scammers. They are for entrepreneurs, technologists, change-the-world dreamers, and those who believe they can (and will) enable new business models, new types of organizations, and new ways to service consumers and businesses alike.

Recently, Mougayar formed the non-profit Token Awareness Canada along with a group of fellow blockchain funders like Vanbex Group CEO Kevin Hobb and Kik founder Ted Livingston. The group aims to promote blockchain in Canada by setting up best practices for cryptocurrency startups.

A graduate of the University of Washington and the University of Western Ontario’s Ivey School of Business and formerly senior-level management at Hewlett-Packard, Cognizant and Aberdeen Group, Mougayar has a long track record in working to promote Canadian businesses and helping to grow Canada’s startup community.

He points to the recent move by Canadian-based Kik, the world’s 5th most popular messaging app, to exclude Canada and Canadian residents from investing in its token distribution event because of unclear guidelines set by the OSC, saying that his own global blockchain index is likely going down the same path of excluding Canada.

“Cryptocurrencies are not evil and are not for money launderers and scammers,” writes Mougayar. “They are for entrepreneurs, technologists, change-the-world dreamers, and those who believe they can (and will) enable new business models, new types of organizations, and new ways to service consumers and businesses alike.”

Blockchain’s distributed ledger is gaining more supporters daily, with companies as diverse as Disney Corp, the Royal Bank of Canada and British Petroleum recently announcing forays into the new terrain, which its adherents claim has tonnes of potential in making the transfer of wealth and value more efficient and secure.

“There are uses for blockchain that could give us a competitive advantage,” said David Eyton, head of technology for BP, to the Financial Times. “Blockchain can be much more efficient in terms of speed and verification of transactions.”

At the Blockchain for Finance conference in Dublin, Ireland, yesterday, Barclays bank vice chairman, Jeremy Wilson, spoke of the emergence of blockchain in revolutionary tones, saying, “We are in the process of developing a new operating system for the planet.”

Mougayar’s letter sets out a list of demands for Canadian regulators, asking that they allow consumers to invest in clearly defined cryptocurrency markets, that they encourage the effective operation of Canadian-based cryptocurrency funds and that they do a better job of supporting Canadian startups in the industry.

“Many other geographies around the world don’t have the luxury of a healthy startup ecosystem filled with engineering talent, experienced entrepreneurs, and a critical mass of startups,” writes Mougayar. “Canada has that critical mass, and we could make a difference, if we are allowed to adopt the blockchain as part of our future evolution.”

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