Vancouver City Council passed motion to make the city “Bitcoin-friendly”

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As a seasoned crypto investor with over two decades of experience under my belt, I find Vancouver’s decision to explore Bitcoin (BTC) as a reserve asset intriguing and potentially groundbreaking. I remember the early days of Bitcoin when it was just a theoretical concept, and now seeing it considered by cities as a strategic financial tool is quite remarkable.

On December 11th, Vancouver city council members approved Mayor Ken Sim’s proposal to make the city more accommodating towards Bitcoin, giving staff permission to investigate the possibility of storing cryptocurrency as a reserve.

Mayor Ken Sim, who assumed office as mayor of Vancouver in 2022, told CBC that he considers investing in Bitcoin (BTC) to be financially prudent given the current era of inflation and market fluctuations. He has also pledged to donate $10,000 worth of BTC from his personal assets to the city. City officials are now exploring whether Bitcoin can be integrated into the city’s financial plans and if it is feasible for Vancouver to invest in cryptocurrency by converting a portion of its existing financial reserves.

The proposal suggests that it would be unwise for the City of Vancouver not to consider the potential benefits of investing in Bitcoin (BTC), as this digital currency could potentially function like a form of digital gold and act as a secure store of value that resists inflation. With a maximum supply of only 21 million coins, BTC is often referred to as a precious metal analogue that can help maintain the city’s financial stability.

Today, the Vancouver City Council endorsed the 2025 budget, which includes a 2.9% increase in taxes. Notably, an extra 1% will be allocated towards upgrading essential infrastructure like water and sewer systems. This investment aims to build a city that is robust, secure, and cost-effective without compromising on necessary services.

— Mayor Ken Sim (@KenSimCity) December 10, 2024

The mayor stated that he consulted with the city’s auditor general prior to crafting his proposal. Initially speaking were various individuals, among them Victoria Lemieux, head of Blockchain research at UBC, who found the council’s decision a straightforward endorsement. Nevertheless, there has been apprehension regarding the ecological impact of BTC mining and the instability of cryptocurrency, casting doubt on its suitability for city funds. In addition, Lemieux remarked to CBC, “Mining BTC would require a substantial amount of energy.

Can Bitcoin be used as a reserve asset in Vancouver?

In simple terms, the Currency Act by the Bank of Canada restricts cities from using Bitcoin for local payments or keeping it as a reserve due to their limited investment options aimed at minimizing financial risk. The only acceptable currency in this context is physical money like banknotes and coins, which are produced by either the Bank of Canada or the Royal Canadian Mint. As per the Canada Revenue Agency, cryptocurrencies are classified as commodities rather than legal tender in Canada’s law.

In essence, Section 27.1 of the Bank of Canada Act allows the bank to establish a specific fund to account for losses in the value of its investments that haven’t been realized yet. This provision doesn’t explicitly mention cryptocurrencies, but it suggests flexibility in the types of assets the Bank of Canada can consider. If legislative adjustments are made, Vancouver’s motion hints at a possible move towards incorporating Bitcoin into traditional financial holdings. In other words, this motion could signal Vancouver’s readiness to challenge the existing norms.

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2024-12-12 07:30