More than a third of Canadian cryptocurrency traders have fallen victim to scams, study shows

This article briefly:
A large number of Canadians have lost money to cryptocurrency fraud or scams, with lower-income and less-educated people experiencing higher rates of loss.
Fully 19% of Canadian cryptocurrency owners have faced online abuse, compared to 6% of non-owners.
Large exchanges have started leaving the country due to regulatory changes.
Given the report’s findings, one fact shouldn’t surprise anyone. Canada is far less enthusiastic about cryptocurrency than its more populous southern neighbor, the United States. According to the Chainalysis 2022 Crypto Adoption Index, released a month before the survey was conducted, Canada ranks only 22nd in the world in terms of adoption. The United States is fifth. The United Kingdom is 17th.
However, Canada did beat out other peer countries including France (32), Australia (40), New Zealand (108), the Netherlands (39) and Ireland (124), but fell short of Germany (21).
City University of Toronto has no doubts as to why Canada may not be as quick to adopt and trade crypto assets. Its researchers found that Canadians generally show “extremely low” trust in crypto asset exchanges. The fall of FTX and other scandals have done little to help.
A new report from authors affiliated with City University of Toronto will put to rest any notion that today’s cryptocurrency investors are too sophisticated to fall prey to scammers. The report draws on the results of a national survey conducted in October 2022. Its straightforward findings offer an urgent call for action. But Ottawa must strike a balance between tough enforcement and respect for innovation.
Canadian Crypto Owners Subject to More Online Abuse
A full 35% of Canadians surveyed said they had experienced some form of cryptocurrency fraud or scam. Notably, rates were higher among lower-income and less educated people.
The study also revealed a link between cryptocurrency ownership and online harassment. The survey showed that online abuse affects nearly one in five (19%) cryptocurrency owners, compared to 6% of those who do not own cryptocurrency. In many cases, the abuse is so severe that the recipient fears for their safety, the report said.
The extent of the fraud would come as a shock to some. However, according to the report, Canadian cryptocurrency owners do not feel they are more likely to believe misinformation than people elsewhere.
The October 2022 investigation incorporated into the new report predates the implosion of FTX and the arrest of its CEO Sam Bankman-Fried in November 2022. The report notes that there were serious concerns about cryptocurrencies even before the FTX collapse.
The report makes clear recommendations to the Canadian government regarding the crypto-asset sector. They include aligning financial crypto-asset regulation with other Canadian policies and legal systems. And coordinating with peer jurisdictions and international institutions on policy development.
Given the report’s findings, one fact shouldn’t surprise anyone. Canada is far less enthusiastic about cryptocurrency than its more populous southern neighbor, the United States. According to the Chainalysis 2022 Crypto Adoption Index, released a month before the survey was conducted, Canada ranks only 22nd in the world in terms of adoption. The United States is fifth. The United Kingdom is 17th.
However, Canada did beat out other peer countries including France (32), Australia (40), New Zealand (108), the Netherlands (39) and Ireland (124), but fell short of Germany (21).
City University of Toronto has no doubts as to why Canada may not be as quick to adopt and trade crypto assets. Its researchers found that Canadians generally show “extremely low” trust in crypto asset exchanges. The fall of FTX and other scandals have done little to help.
Exchanges exiting Canadian market
The challenge facing Canadian regulators is to curb scams and fraud without driving out exchanges. Smarter regulation, rather than hostility toward cryptocurrencies, is essential. So far, their record is not encouraging.
Last month, Dubai-based Bybit announced it would cease operations in Canada amid calls for greater scrutiny from Canadian securities regulators. The company will no longer accept new Canadian residents or nationals, and traders must close margin positions by September 30 to avoid auto-liquidation.
In early May, Binance, the world’s largest cryptocurrency exchange, announced its withdrawal from the Canadian market for similar reasons.