Canada’s crypto market is one of the most controversial ones. A large part of the market participants welcome regulatory clarity and a favorable environment to build their businesses. Some, on the contrary, have made their exit, creating more room in a highly competitive niche.
The numbers suggest, however, that Canada's infrastructure and population widely embrace cryptocurrencies — both retail and institutional investors have shown significant exposure to digital assets. This, combined with favorable market conditions, may take crypto adoption in Canada to new heights over the coming months, or years.
Canada’s Crypto Market Today
By mid-2024, the Canadian crypto industry has reached remarkable milestones in several aspects.
Half of Canada’s financial platforms offer crypto services
According to a recent KPMG report, 50% of the financial services in Canada offer at least one cryptocurrency feature for their clients. On average, platforms have 2-3 crypto offerings, up from 1-2 in 2021. The three most popular ones include crypto asset trading, custody & settlement services, and quantitative trading.
The expansion of crypto services has come in response to growing client demand: 8 out of 10 platforms cited a high appetite for crypto from retail investors as the main factor for boosting their functionality. Moving forward into 2024, prominent crypto market players indicate spikes in new registrations.
Canada’s institutions don’t fall behind retail investors: 39% have had exposure to cryptocurrencies, with three-quarters holding crypto assets directly, compared to just 29% two years ago. The report notes that institutional investors have refocused their attention on crypto amid the ongoing bull run, improved regulatory clarity, and crypto-related innovations.
The ETF market adapts to competition from the U.S., supported by the regulator
Canada is a proud pioneer in crypto ETFs: back in 2021, its authorities approved the first spot Bitcoin and Ethereum exchange-traded funds. It took the U.S. three years to catch up — however, when they did launch the first crypto ETFs in 2024, Canadian financial institutions experienced severe outflows. Overall, they lost a staggering $832 million in the first half of the year, nearly 50% of the $1.67 billion in funds they had under management in 2023.
The reason for the switch is that Canadian providers offered higher management fees, leading many clients to switch to American counterparts. To remain competitive, several Canadian ETF providers had to lower their commissions.
Notably, Canadian authorities grasp the part crypto ETFs play in the bigger market. In its Staff Notice 81-336, Canada’s Securities Administrators (CSA) notes that exchange-traded funds can hedge against crypto price swings, and highlights that Bitcoin ETFs provide great crypto asset support while keeping investors’ money safe.
Stablecoin compliance deadline extended by the regulator
One of Canada's most controversial recent regulatory initiatives was the decision to introduce strict rules for trading and issuing stablecoins. The CSA proposed categorizing “value-referenced crypto assets” as securities or derivatives — which, according to many industry players, could effectively ban stablecoins in the country. The regulator gave crypto firms until the end of April 2024 to comply with the new regulations.
Multiple crypto platforms struggled to meet all the conditions within the short timeframe, so the watchdog engaged in a dialogue with the businesses and extended the deadline by six months. The new requirements include reserve funds, due diligence provisions, disclosure directives, and more.
Regulations remain relatively strict, seeking to protect investors
Regulations in Canada remain stringent, with a strong focus on investor protection. This creates a significant challenge for crypto platforms attempting to enter the market.
Opening an office here and becoming a full-fledged player in the local industry is quite a challenge: for example, it took Canada’s first major crypto exchange about a year of negotiations to obtain registration as a restricted dealer. Company representatives claimed that the authorities were less collaborative than those in other countries, like the U.S. At the same time, other crypto firms praise Canadian authorities for providing regulatory clarity.
If strict, Canadian crypto regulations offer much greater transparency than many other markets, specifying details for individual operations. For example, the CSA has clear rules for staking: the authority warns fund managers to monitor that liquid crypto assets do not become illiquid during staking to ensure compliance with illiquidity restrictions.
Why Canada’s Crypto Market Has Everything to Soar
I’m bullish on the future of cryptocurrency in Canada for three reasons.
Market conditions favor increased investor confidence
Institutional and retail investors in Canada already have a significant interest in crypto assets, which can be further fueled by market dynamics. The Bitcoin halving took place in April 2024 — historically, the industry has grown multiple times within a year and a half after the event. If this pattern repeats in this market cycle, we will see how mature Canadian crypto infrastructure converts into increased crypto adoption in the country.
However, favorable market factors extend far beyond the digital asset industry.
Rate cuts drive investors to crypto
The Bank of Canada has cut its key interest rate twice in the past months — such moves usually positively impact the crypto market.
Reduced interest rates lower the cost of borrowing, leading to increased consumer spending and business investment. This boost in liquidity creates a spike in investments in high-yield assets, including cryptocurrencies.
As central bank rates decrease, the returns on traditional investment instruments fall. Consequently, investors embrace riskier assets, such as digital coins; the increased demand for cryptocurrencies can drive their price growth further.
World’s largest event to launch in Toronto next year
Consensus, one of the industry’s largest conferences, will come to Toronto, Canada, for the first time in May 2025. The 2024 event, hosted in Austin, Texas, attracted 15,000 attendees, 750 journalists, and 550 speakers.
The organizers described Toronto’s tech ecosystem as “among the fastest-growing in North America” and highlighted its robust community of startups and tech giants. Choosing Toronto for such a high-profile conference underscores Canada’s achievements in developing its crypto environment and will significantly boost further growth.
A Blend of Opportunities
Today’s crypto market in Canada features rich infrastructure, a strong talent pool, and millions of investors using cryptocurrency products. While strict regulations might deter some industry players, they ensure that clients can trust the services that have undergone rigorous compliance procedures. Lowered key interest rates, an anticipated bull run, and the availability of crypto platforms create unique conditions for the crypto market’s expansion in Canada.
