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Payments Canada Summit: navigating the crypto headwinds

A panel of industry players and regulators took on the tricky task of unpacking the frantic last year of crypto developments, taking three cataclysmic events – the TerraUSD ad Luna implosion, the collapse of the Celsius network, and the FTX debacle - as jumping off points to explore where the industry is headed.

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Payments Canada Summit: navigating the crypto headwinds

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Despite the subject matter, moderator Soumak Chatterjee from Deloitte insisted that we were not going to get a “doomsday panel”.

Charlene Cieslik from Bitcoin ATM operator Localcoin noted that the recent US bank failures put paid to a widely held perception that the digital asset space is uniquely unstable.

However, the participants were under no illusion about the damage that the sector’s reputation has suffered in the last few months. And, while some in the US have been chaffing at regulatory intervention, there was broad acceptance on the panel that there needs to be cooperation with lawmakers.

Mohamad Al-Bustami from the Office of the Superintendent of Financial Institutions was at pains to stress that his body is not ant-crypto and that he is a “believer” in the technology and that engaging with the industry is playing a key role in how regulation is being shaped.

Cieslik and Evan Thomas from WealthSimple offered a clear example of how different firms have gone about entering the crypto space - with contrasting results.

WealthSimple became the first Canadian company to offer clients staking while meeting securities laws, spending significant resources working with regulators to ensure that it would be compliant.

In contrast, Cieslik said that her former employer, Coinsquare, blew four year lead on WealthSimple by not being so diligent and carrying out wash trading as well as whistleblower retaliation.

Cieslik had some strong thoughts on FTX and what its failure says about the broader ecosystem. There were, she notes, a host of accounting firms, VCs and others that claim to have done due diligence on the company.

“There was no adult in the room. What exactly was your due diligence other than FOMO?”

Thomas, though, was optimistic about the Canadian scene, remembering the country’s own FTX moment, the QuadrigaCX scandal.

That fraud led to a huge regulatory response that now sees the industry having to abide by the same sort of rules, and carry out the same basic best practices that are required of more traditional financial firms, making the industry safer for users.

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