Vancouver takes step toward becoming 'bitcoin-friendly' city

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.

Vancouver councillors have given city staff the green light to explore holding cryptocurrency in reserve and accepting payments in the virtual currency, a move that could make the city more "bitcoin-friendly."

The motion, put forward by Mayor Ken Sim, passed on Wednesday during a council meeting at Vancouver city hall.

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. He even said he would personally donate $10,000 worth of bitcoins to the city.

"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."

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.

WATCH | Experts and cryptocurrency advocates react to Sim's plan:

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."

WATCH | Cryptocurrency advocates tout potential of bitcoin:

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.

In this April 2014 file photo, a man arrives for the Inside Bitcoins conference and trade show in New York. (Mark Lennihan/The Associated Press)

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.

"We totally believe in the benefits of bitcoin and crypto and we're putting our money where our mouth is," he told Coin Stories host Greg Foss.

"We're going to be personally donating bitcoin to the City of Vancouver and we hope that council will accept it and put it towards something that will benefit all Vancouverites."

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.

A sign advertises a bitcoin cryptocurrency ATM at a shop in Halifax in February 2020. Bitcoin is created, distributed, traded and stored with the use of a decentralized ledger system known as blockchain. (Andrew Vaughan/The Canadian Press)

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.