Vancouver councillors passed a motion from Mayor Ken Sim on Wednesday that seeks to make the city “bitcoin-friendly,” giving staff the thumbs up to explore holding cryptocurrency in reserve and accepting payments in the virtual currency.
Sim, who’s an investor in a cryptocurrency exchange, said he believes investing in bitcoin is the financially responsible thing to do in an age of inflation and market volatility, and even said he would donate $10,000 worth of bitcoins personally to the city.
City staff will now have to research if the city could integrate bitcoin into its financial strategies and whether the city could invest in cryptocurrency by converting “a portion” of Vancouver’s financial reserves.
“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 the city’s financial stability,” Sim’s motion reads.
The City of Vancouver could soon take a major leap into the world of cryptocurrency. Mayor Ken Sim is introducing a motion to explore making Vancouver a bitcoin-friendly city. But some experts say the move could be risky.
The mayor holds an investment in cryptocurrency exchange Coinbase Global Inc., according to his 2024 financial disclosure. The company offers a platform through which bitcoin can be traded.
The mayor says he consulted with the city’s auditor general before proposing his motion.
On Wednesday, more than a dozen speakers spoke in favour of the idea, including Victoria Lemieux, head of the Blockchain@UBC research cluster.
“Paying for city services and infrastructure by, surprisingly, mining bitcoin sounds like it would use up a lot of energy,” she told Stephen Quinn, host of CBC’s The Early Edition.
“But there are green efforts afoot in the bitcoin mining sector, and I think we could definitely look at those and how they might benefit paying for things like heating city pools and other sorts of services.”
Mayor Ken Sim’s proposal to make Vancouver a “bitcoin-friendly” city could result in new areas of economic growth like bitcoin mining, say UBC professor Victoria Lemieux, head of the Blockchain@UBC research cluster, and Jesse McKee, head of digital strategy at the 2-21-A art and design hub.
But some experts have expressed skepticism over the environmental upsides of cryptocurrency mining, as well as raised concerns that cryptocurrency’s volatility means it is unsuitable for use in a city’s financial reserves.
The environmental impact of bitcoin mining largely boils down to the energy source used in the process. Industry analysts have maintained that clean energy has increased in use in recent years, as concern has grown over the amount of power it requires.
Green Coun. Pete Fry also expressed concern over the use of cryptocurrency in organized crime.
“In the absence of any really specific acknowledgement 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.
Sim himself was bullish on the use of cryptocurrency, with the mayor having recently described bitcoin as “the greatest invention ever in human history,” in an interview with cryptocurrency talk show Coin Stories.
“Our family is going to donate $10,000 to the City of Vancouver in the form of bitcoin and this is going to be a gift to the city that we love,” he told the meeting.
“We totally believe in the benefits of this and we’re putting our money where our mouth is.”
No framework to use bitcoin
Sim’s ambitions could be stymied by existing laws, which currently don’t allow cities to use bitcoin.
Beyond that, the federal government controls the financial framework for the country, says Dan Rohde, assistant professor at the University of Windsor’s faculty of law.
“I don’t even think the provinces would have jurisdiction to, for example, recognize bitcoin as a currency in Canada,” he told CBC News on Sunday.
In a statement, a spokesperson for the Ministry of Housing and Municipal Affairs said the province’s Community Charter, as well as the Vancouver Charter, don’t recognize cryptocurrency as payment for “municipal services or other transactions.”
The ministry said local governments are also not permitted to hold financial reserves in cryptocurrency.
It explained that legislation specifies how public funds can be invested or reinvested, and cryptocurrencies like bitcoin are not among the approved options.
“The intent of the legislation is that local government funds are not exposed to undue risk,” a ministry spokesperson said.
