Cryptocurrency has quickly transitioned from outside the financial world to a popular investment choice in Canada. A 2023 Finder.com poll indicates that nearly 18% of Canadians have invested in some kind of digital currency, compared to about 14% only a year ago.
This slow rise reflects a broader trend of digital currencies becoming a recognized and favoured element of personal finance and investment strategies.
IMAGE: DAVID BIRKENSHAW
Younger Canadians are driving a significant portion of this increase. The 2024 Canadian Securities Administrators (CSA) Investor Index says 33% of Canadians between 18 and 34 own at least one type of cryptocurrency, versus a mere 4% ownership rate among individuals 65 and above.
This trend reveals the divide in investment choices among generations, as younger folks are more open to the risks and innovations involved in crypto.
“Younger investors are seeking more than just fast returns,” says David Birkenshaw, a mining and blockchain expert from Toronto. “Many are drawn to the foundational technology and its ability to transform conventional finance. Cryptocurrency is becoming more recognized as a means of diversifying a portfolio, rather than merely as a form of speculative betting,” he says.
Increased offerings of regulated investment products, including cryptocurrency ETFs, play a major part as well. These enable investors to get exposure to digital assets such as Bitcoin and Ethereum without dealing with the intricacies of directly owning and securely holding the currencies.
Several crypto ETFs launched in Canadian markets have also made it easier and less risky for the average investor to gain access.
“Regulatory clarity has been crucial. Canada’s oversight of cryptocurrency exchanges and investment products has provided confidence to investors who otherwise might be concerned about scams or losing their digital assets to hacking,” says Birkenshaw. He stresses that a well-regulated space is what will facilitate more institutional money into the market, and this leads to more stability.
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However, crypto investing is still risky. The markets remain extremely volatile, with prices often alternating by double-digit percentages within days or hours. This volatility can be frightening for investors used to traditional assets such as stocks and bonds.
Regulations are still changing. While Canada has improved in setting guidelines, future changes could affect how cryptocurrencies are traded and taxed. This creates an environment where investors must stay vigilant and flexible.
“Technology and markets have matured, but they’re still in an early stage. Investors should approach crypto with the same discipline as any other asset, by doing thorough research, diversifying holdings, and preparing for potential setbacks,” says Birkenshaw.
Another new trend among Canadians is the use of cryptocurrency in everyday financial activities. More Canadians are turning to digital coins for payments, remittances or as a hedge against inflation, especially during times of economic uncertainty. This broader use helps normalize cryptocurrency beyond an investment vehicle.
Canadian banks are also warming up to blockchain, the technology that serves as the digital infrastructure for cryptocurrencies. Banks and fintech companies are exploring how to utilize blockchain for faster payments, stronger security, and better transparency. This type of mainstream appeal legitimizes digital assets and boosts investors’ confidence.
But there are still barriers in terms of public education. Many Canadians struggle to understand cryptocurrencies and how they function, and the risks. Misinformation and media hype frequently skew the public’s perception.
“Education is the foundation for responsible investing. Without clear, accessible information, people are more likely to make poor decisions or experience fraud,” says Birkenshaw. He advocates for increased public outreach and resources to help Canadians understand this tricky market.
Canada’s cryptocurrency environment is set for continued growth and innovation. With evolving regulations, expanding investment options, and a new generation of tech-savvy investors, digital assets are likely to become a permanent fixture in Canadian portfolios.
These trends indicate that cryptocurrency investment in Canada is growing quickly because of young investors, improved regulations, and various financial services.
While risks remain, experts like David Birkenshaw believe that with education and hopeful caution, cryptocurrency can become a valuable part of Canada’s investment ecosystem.
Disclaimer: The above references an opinion of the author and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. Invest responsibly and never invest more than you can afford to lose.
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