Coinsmart CEO: regulation is the ‘undertone of our entire business’

The Trudeau government ordered last week cryptocurrency exchanges to disclose to the national police service “any information about a transaction or proposition transaction” linked to more than 30 crypto wallet addresses.

Most recently, Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland made it clear that the government will expand its asset freezing strategy as part of the recent Emergencies Act.

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The move follows a tense showdown in Ottawa as the multi-week long truckers protest in the nation’s capital appears to have come to an end. Invezz had the opportunity to briefly discuss the situation with a regulated Canadian crypto trading platform to understand their obligations.

Crypto CEO: ‘automatic’ decision to comply

The question that is on many crypto observers’ minds is how will the industry react.  The  main premise of cryptocurrency is that it is immune from the reaching hands of the government.

In reality, this is not necessarily the case as the crypto industry, like any other industry, is regulated in some form or another.

Justin Hartzman, CEO & Co-Founder of Toronto-based Coinsmart told Invezz’s Lead News Editor Jayson Derrick that regulation is the “undertone of our entire business.” The company has a legal obligation to cooperate with authorities, an action it has full intention of taking to the extent of the law.

Hartzman acknowledges that the order to report suspicious crypto activity is still “pretty hard-core” and is a scenario that has never presented itself in Canada. Regardless, it was an “automatic” decision to comply with regulators. He said:

That is the safest thing for our shareholders as a public company and is in-line with our regulatory first approach. 

Hartzman said he believes that cooperation is the best long-term strategy to ensure the longevity of the business and the cryptocurrency community as a whole. His decision is “more or less” echoed among other broker companies.

A ‘bad look’ for Canada

The Canadian government, much like every other western democracy, already has in place rules and regulations to combat illegal financial activities. 

But Trudeau is taking “extraordinary measures” to go “around that,” Hartzman said. From a political perspective, this could mark the downfall of the Liberal party that has been in power since Stephen Harper’s defeat in 2015.

However, a federal election in the near-term appears to be out of the question considering Canadians were just at the polls in September, 2021. The Conservative Party is also void of a permanent leader after their leader Erin O’Toole was ousted just a few short weeks ago.

Canada is harboring some incredible blockchain companies but they may be seeking greener pastures elsewhere. This has been the “temperature of the community for a while” and the recent government actions “might amplify” the sentiment, he said.

Yet the crypto executive can also see the opposite playing out. One could argue the contrarian view that the government’s actions could bring “more interest”. He said:

I think the recognition that the market is out there and that  the people are thinking about it is important.