EXCLUSIVE: Coinbase Conquers Canadian Crypto Market, Sets Sights On Future Growth

Following Coinbase Global Inc's COIN launch in Canada, Benzinga spoke with the exchange’s Canada Country Director Lucas Matheson to discuss the expansion and plans for the upcoming year.

BZ: It's been quite a journey for Coinbase in Canada. You launched this summer and quickly expanded to around 200 employees. Can you share the challenges you faced during this rapid scaling, and is there anything you wish you had approached differently in this market?

Matheson: Coinbase Canada has had a fantastic year since we launched. We've built an incredible team across the country. Many Canadians have worked for Coinbase for several years, but we've expanded that.

Furthermore, we've had some big wins, namely improving our product experience. One key milestone was introducing Interac – a Canadian interbank network addressing a significant product gap and making it easy for Canadians to deposit money through online banking. Over 80% of our inflows are coming to Coinbase Canada via Interac payments.  

In terms of scaling – we're committed to the country and building a strong team here to build safe, compliant products for Canadians. As for challenges – regulatory clarity is a significant focus. We're working closely with regulators to ensure we have a robust regulatory framework here to help Canadians have access to the digital economy.

BZ: The Canadian banking system traditionally has high barriers to entry, as seen with market share divided between a few key players. However, the Canadian regulatory process is arguably way more effective. How did this fact influence the crypto expansion in this market?

Matheson: Given such high levels of crypto awareness and demand in Canada, I think our regulators have done an excellent job at helping to establish regulatory clarity. They stepped in, drew a line in the sand and asked crypto trading platforms to sign a pre-registration undertaking earlier this year to commit to getting regulated in the country. That created an opportunity for our industry to work closely with regulators and identify the areas where we can build a strong framework for Canada and ensure that our industry can thrive here.

While meeting these regulatory requirements in Canada is a high bar, I always remind myself that the outcomes regulators and Coinbase want are perfectly aligned. We want safe, trusted, real people on our platform acting responsibly. Coinbase has been working with regulators worldwide for the last decade to figure out how we can best ensure that, and we've been able to leverage that global experience to help Canadian regulators.

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BZ: Canada dominates the global spot Bitcoin BTC/USD ETF market, with seven ETFs growing to almost CA$1 billion ($754 million) in 2023. Recently, we've seen BlackRock revise its ETF proposal, obviously working hard to appease the regulators. Looking toward the U.S. spot Bitcoin adaptation, do you see it negatively affecting this ETF momentum developed in Canada?

Matheson: I see ETF approvals as institutional validation for the digital economy. I think it'd be a very positive signal for many markets – to have more ETFs available in large markets.  I think in Canada, it'll increase demand and awareness as we see big institutions in the U.S. get involved.

BZ:  During a recent visit to Canada, Coinbase CEO Brian Armstrong noted that self-custodial wallets may evolve into the next version of browsers. Is Coinbase considering an expansion into standalone solutions beyond the typical API?

Matheson: The mission of Coinbase is to increase economic freedom in the world, and there are many ways to do that. We think of increasing economic freedom and helping 3 groups: consumers, institutional investors and developers. Over the last year, we've invested considerable resources in areas like self-custody wallets and Layer Two solutions.

A self-custody wallet might be the right gateway for many users to access and leverage Web 3. The idea is that your wallet has a concept of identity, permissions and value. This wallet can be used to help an individual store things like loyalty cards or obviously your funds and data about you and allow users to better interact with the internet by controlling data, permissions and funds in a simple way.

One thing the internet unfortunately forgot about was the movement of money. Web 2 effectively forgot about moving money or data as a value around the web, and Web 3 is solving this by including value as a simple transfer form on a decentralized blockchain.

BZ: Recently, Coinbase posted a video about the reality of real estate buying in Canada with the hashtag "update the system." Obviously, the real estate market in Canada has been problematic, and it has had a significant negative impact on society. How can Coinbase help address these issues?

Matheson: Our recent videos were incredible. We're on a mission to update the system and remind people how broken our current financial system is. Surprisingly, we've put up with that system for so long.

Real estate is a good example of an industry with many intermediaries to verify things like ownership, identity or move money, etc. These are native features of a blockchain.

When I think about the experience of buying a house in the future – it will be a much safer, easier and more transparent transaction. Ultimately, this will save buyers money – which is a good thing.

I am excited to see how real estate goes through tokenization and fractional ownership. It will allow people to invest or divest in smaller allocations. We have a lot of real estate investors globally who hold significant stores of value in real estate. I believe many investors are looking for liquidity, and tokenized assets could be a good path for them.

BZ: The next year is upon us. After such a remarkable recovery in 2023, can crypto continue this upbeat momentum? Which challenges do you see on the road ahead?

Matheson: I think that most of the big challenges in Canada are behind us. The opportunity for us is to continue driving regulatory clarity and finding use cases in the digital economy that other geographies can look at, understand and incorporate into their economies. We have a lot of strong momentum from the regulatory perspective worldwide, Canada included.

One of the big challenges is gaining political and banking leadership that can strengthen our economy and position Canada as a leader. 

BZ: It sounds like you’ve had a great year, and we’re looking forward to what 2024 holds. Anything else you’d like to add or share?

Matheson: Coinbase Canada has had an incredible year, and I’m excited for what’s to come in 2024. Canadians are learning quickly about the digital economy. Our goal is to help as many access that market as possible. It’s an exciting time for us!

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