Canadians Go Bitcoin (BTC) as Government Targets Bank Accounts

Bob Mason
Updated: Feb 21, 2022, 08:56 UTC

Canadian banks face bank runs as the government's state of emergency targets bank accounts, which has pushed demand for cryptos.

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Canada has become one of a growing list of nations facing backlash from citizens over COVID-19 curbs. Protests began in late January in response to new laws for cross-border truckers. Effective 15th January, all cross-border truck drivers became subject to mandatory vaccine and quarantine requirements.

The late January protest began with a convoy of truck drivers congregating in Ottawa in protest. This progressed to “The Freedom Convoy 2022” movement that resulted in the Canadian Prime Minister Justin Trudeau’s relocation for safety reasons.

Through February, the situation has escalated, forcing Trudeau to invoke a state of emergency last week. Adding fuel to the fire, Trudeau warned of plans to freeze the bank accounts of anti-mandate protestors. By invoking a state of emergency, the Canadian government can freeze personal bank accounts without need for a court order.

Canadian’s Turn to Bitcoin and Other Cryptos

In response to the state of emergency, Canadians have been reportedly withdrawing money from bank accounts in fear of assets being frozen. UK economic journalist James Melville posted graphs of bank outages from last week, reflecting the surge in banking activity.

Bank runs are self-perpetuating. As more people withdraw funds, the chances of a bank default rise, leading to further bank withdrawals. Without government intervention, this could lead to bankruptcies, in a worst-case scenario.

Ahead of James Melville’s tweet, law enforcement had ordered all regulated financial firms to stop allowing transactions across 34 crypto wallets linked to funding the “The Freedom Convoy 2022”. To date, however, there has yet to be an attempt to freeze the transfer of assets from fiat to crypto.

With Canadians reportedly turning to Bitcoin (BTC) and other cryptocurrencies, however, the government could exert pressure on regulated exchanges to also freeze crypto accounts. While Bitcoin’s very ethos of decentralization favors Canadians looking to be free of the state of emergency, the regulation of crypto exchanges gives authority to the government.

Canada Looking for Crypto Regulatory Framework

Earlier this month, news had hit the wires of a Canadian lawmaker introducing a Bill to create a regulatory framework.

Bill C-249 would require Canada’s Minister of Finance to consult with designated crypto exports across each province. While a number of regulators are looking to clamp down on crypto activity, the Bill aims to support crypto sector growth. To achieve this, the Bill looks to ensure that lawmakers are well-versed with the crypto market before making policy decisions.

The Bill is titled “An Act Representing the Encouragement of the Growth of the Cryptoasset Sector”. The Bill acknowledges that cryptoassets have a significant economic and innovative potential for Canada. The purpose of the Bill is to focus policy “on lowering barriers to entry into the sector”. Additionally, the bill aims to “protect those working in the sector, and minimize administrative burden”.

Following the latest news and shift to cryptocurrencies, however, the Canadian government may be less willing to ease crypto regulations. In fact, the latest protests could result in more stringent regulations, particularly if the government fails to bring an end to the protests by means of freezing bank assets and Canadian crypto exchange accounts.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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