How common are cryptocurrency scams? A full 35% of Canadian crypto owners have fallen victim to such scams, according to data compiled by researchers at Toronto Metropolitan University. Their work also reveals a disturbing correlation between cryptocurrency ownership and online harassment.
The new report from authors affiliated with Toronto Metropolitan University will put to rest any notion that crypto investors these days are too sophisticated to fall prey to scammers. The report draws on findings from a national survey conducted in October 2022. Its blunt findings present an urgent call to action. But Ottawa must balance tough enforcement with respect for innovation.
Canadian Crypto Owners Experience More Online Abuse
A full 35% of Canadians polled said they had experienced some form of crypto fraud or scam. Notably, rates were higher among lower-income and less-educated populations.
The study also exposes a connection between cryptocurrency ownership and online harassment. Online abuse affected nearly one in five (19%) cryptocurrency owners, compared to 6% of individuals who have not owned crypto, according to the survey. In many cases, the abuse was so bad that those on the receiving end feared for their safety, the report says.
The level of fraud will shock some. Yet, according to the report, crypto owners in Canada do not believe they are likelier to believe misinformation than those elsewhere.
The October 2022 survey incorporated into the new report predates the implosion of FTX in November 2022 and the arrest of its CEO, Sam Bankman-Fried. Even before the fall of FTX, people had serious concerns about crypto, the report states.
The report makes clear recommendations to the Canadian government for the crypto-asset space. They include aligning financial crypto-asset regulation with other Canadian policies and legal regimes. And coordinating with peer jurisdictions and international bodies on policymaking.
Given the report’s findings, one fact should surprise no one. Compared to its more populous southern neighbor, the United States, Canada is far less keen on crypto. According to the Chainalysis 2022 Crypto Adoption Index, which came out a month before the survey took place, Canada ranks only 22nd in the world in terms of adoption. The United States is in 5th place. The United Kingdom is 17th.
However, Canada does beat out other peer countries. Including France (32), Australia (40), New Zealand (108), Netherlands (39), and Ireland (124), but is beaten by Germany (21).
The Toronto Metropolitan University leaves no doubt as to why Canada might not be as quick to use and trade crypto-assets. Its researchers found that Canadians generally express “extremely low” levels of trust in crypto-asset exchanges. The fall of FTX, and other scandals, can hardly have helped.
Exchanges Leaving the Canadian Market
The challenge for Canadian regulators is to curb the scams and fraud without driving away exchanges. Smarter regulation, not hostility to crypto, is crucial. So far, their record is not encouraging.
Last month, amid tougher scrutiny mandated by the Canadian securities administrators, Dubai-based Bybit announced that it will cease operations in Canada. The company will no longer onboard new Canadian residents or nationals, and traders must close margin positions by September 30 to avoid automatic liquidation.
Earlier in May, the world’s largest crypto exchange, Binance, announced an exit from the Canadian market on similar grounds.
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