The City of Vancouver is looking into adding bitcoin to its financial system after city council passed a motion in that regard. Mayor Ken Sim is leading the charge to look into accepting bitcoin for taxes and fees and holding bitcoin as part of the city’s reserves.
It’s a big move for a big city, and marks the first major Canadian city to really consider bitcoin as part of its municipal strategy despite regulatory and environmental hurdles.
The motion asks staff to do a feasibility study on adding bitcoin to the city’s financial systems, with report due first quarter 2025. Study will look at the risks, benefits and logistics of being a “Bitcoin-friendly” city.
Mayor Sim who has been a long time Bitcoin advocate, said:
“It would be irresponsible for the City of Vancouver to not look at the merits of adding Bitcoin to the city’s strategic assets to preserve financial stability.”
He has called Bitcoin “the greatest invention in human history” and has promised to personally donate $10,000 worth of bitcoin to the city regardless of the study’s outcome.
Sim who has investments in digital-asset-related funds and companies like Coinbase Global and Purpose Bitcoin ETF said bitcoin could be a hedge against inflation and the volatility of traditional fiat currencies.
“Bitcoin is the number one performing asset on the planet over the last 16 years,” he said. “To not even look at including it as a part of a diversified portfolio is, I think, reckless.”
Some residents and digital assets fans are in favor of the motion while others are not.
Green Councilor Pete Fry was opposed, citing Bitcoin’s connection to money laundering and organized crime.
“In the absence of any really specific acknowledgment of the very serious issues around money laundering and the history in this city, I don’t think this is a step in the right direction,” he said, referencing warnings from law enforcement agencies like the Vancouver Police Department and FINTRAC.
Fellow Green Councilor Adriane Carr also raised environmental concerns, pointing out the energy consumption of bitcoin mining. “There is a lot of concern around the use of electricity,” she said, and given the current debates around the city’s power grid.
Related: Swiss Canton of Bern Explores Bitcoin Mining to Optimize Energy Use
Despite those, the motion passed with support from Sim’s ABC Vancouver Party colleagues.
Councillor Peter Meiszner who voted yes said: “I am cognizant that there is a significant difference between residents of Vancouver investing their own money in cryptocurrency and the city doing the same with public money.”
Even if the study comes back positive, the city has big regulatory hurdles ahead. According to BC’s Ministry of Municipal Affairs, local governments can’t hold financial reserves in digital assets. The ministry states that current legislation is to protect public funds from undue risk.
The federal government oversees the financial framework in Canada, so changes at the municipal level would require broader changes to the law.
“I don’t even think the provinces would have jurisdiction to recognize Bitcoin as a currency in Canada,” said Dan Rohde, a law professor at the University of Windsor.
Vancouver’s interest in Bitcoin is a 180 degree turn from where they were just a few years ago.
In 2019 they were considering banning Bitcoin ATMs because of their use in illegal activities. Interestingly, Vancouver was home to the world’s first Bitcoin ATM, installed in a downtown coffee shop in 2013.
Now, city staff have until 2025 to report back. The study will look at bitcoin as a municipal asset, the risks of volatility and the environmental impact of bringing in the digital asset.
Proponents say Bitcoin’s decentralization and limited supply will protect the city’s finances from inflation and currency devaluation, and ultimately benefit taxpayers.
Mayor Sim is hopeful. He stated:
“When we wake up five to ten years from now, this is going to be ubiquitous across the planet. Governments have to catch up.”
At least for now, Vancouver will study bitcoin more closely. But it’s not a done deal. What happens next depends on the study’s results and the city’s plans to overcome regulatory hurdles.
