As cryptocurrency prices plunge and some of the exchanges they trade on pause withdrawals, the federal Liberal government is eager to remind voters that Conservative Leader Pierre Poilievre once touted the asset class as a way to “opt out” of inflation.
Cryptocurrencies surged during the pandemic as investors pumped stimulus cheques into the market. But the whole industry faces an uncertain future now that FTX, one of the largest crypto exchanges, is in bankruptcy and its disgraced founder, Sam Bankman-Fried, is facing a series of regulatory probes.
Another exchange, BlockFi, is in disarray. The U.S. Securities and Exchange Commission (SEC) is also reportedly investigating other major crypto players, Binance and Coinbase, following the FTX implosion.
The result has been massive price pressure on bitcoin and other cryptocurrencies like ethereum.
The price of bitcoin is a fraction of what it was when Poilievre announced in March his plan to make Canada the “blockchain capital of the world” — a reference to the system that records bitcoin and other cryptocurrency transactions.
Speaking at a shawarma shop in London, Ont. that accepts bitcoin as payment, Poilievre told voters earlier this year that “Canada needs less financial control for politicians and bankers and more financial freedom for the people.”
“Choice and competition can give Canadians better money and financial products. Not only that, but it can also let Canadians opt-out of inflation with the ability to opt-in to crypto currencies. It’s time for Canadians to take back control of their money,” he said.
During his run for the Conservative leadership, Poilievre’s campaign said he wants to foster “a new, decentralized, bottom-up economy” by creating a more permissive regulatory environment for crypto.
He said he’d work with the provinces and territories to eliminate a “cobweb of contradictory rules” that govern products like bitcoin and blockchain. Poilievre also said he wants crypto to be treated like gold and other commodities for taxation purposes.
And the Conservative leader has put his money where his mouth is.
According to a federal ethics commissioner filing, Poilievre held an investment in bitcoin as of May 4. He declared an ownership stake in the Purpose bitcoin exchange-traded fund (ETF), an investment that closely tracks the price of bitcoin.
Bitcoin is trading at roughly $16,500 US — nearly 75 per cent lower than its value in November 2021.
That means if you invested $10,000 in bitcoin at this time last year, you’d have just $2,500 left of that initial investment — an eye-popping loss of value for any financial product.
If Poilievre still owns a piece of the bitcoin ETF, his investment would be worth 60 per cent less than what it traded for in May, when he first disclosed the holding.
Poilievre’s office did not respond to a request for comment about his current bitcoin ownership.
As the crypto chaos continues, Finance Minister Chrystia Freeland has been calling on Poilievre to “apologize” for boosting a product that has cost some investors dearly.
When faced with Conservative claims that massive Liberal deficit budgets have fuelled sky-high inflation, Freeland has hit back by arguing Poilievre can’t be trusted with the country’s money after touting a product that has tanked.
“Let’s talk about some really terrible advice that was offered to Canadians in the spring by the Conservative leader. He urged Canadians to invest in crypto as a way to opt out of inflation. Now, bitcoin has crashed by 21 per cent over the past week and by more than 65 per cent since the Conservative leader first gave Canadians that reckless advice,” Freeland said in question period Monday.
“The Conservatives should apologize today for this reckless policy and admit that investing in crypto would have bankrupted Canadians.”
WATCH: Conservatives should apologize for ‘reckless’ crypto advice, Freeland says
Not everyone has been bankrupted by crypto. An investor who poured cash into bitcoin in the early days of the pandemic — and held that position until now — would actually be sitting on a gain. Earlier investors have fared even better.
And crypto could see a rebound — bitcoin went through a similar crisis during the “great crypto crash” of 2018, only to surge in subsequent years.
Regardless, Poilievre has gone silent on the issue since prices started to crater. He hasn’t made any more appearances on crypto-themed podcasts.
In February, Poilievre was a guest on a show hosted by a bitcoin trader who has compared central banking policies to slavery.
Poilievre told the show’s host, Robert Breedlove, that he and his wife watch his YouTube channel “late into the night.”
“I find it extremely informative and my wife and I have been known to watch YouTube and your channel late into the night once we’ve got the kids to bed,” Poilievre said. “And I’ve always enjoyed it and I’ve learned a lot about bitcoin and other monetary issues from listening to you.”
Mariam Humayun is an assistant professor of marketing at the University of Ottawa and an expert in bitcoin and cryptocurrency.
She said some “people in the bitcoin space are very, very sceptical” of politicians that “jump on the bandwagon.”
“They use a few buzzwords to sound innovative but they don’t do the due diligence about what they’re actually supporting,” she said. “They project their politics onto bitcoin when this technology is really an apolitical thing.”
Humayun said some industry types regard politicians like Poilievre as “fair-weather friends” who are all-in on the product when prices are high but disappear when there’s a rough patch.
“There’s a lot of people who have been affected and they’ve lost their savings, unfortunately. Social media has supercharged some of these things. There will be a huge reckoning for the ecosystem,” she said of the post-FTX collapse crypto environment.
‘He’s not naive’
J.P. Lewis is a professor of political science at the University of New Brunswick Saint John and the author of The Blueprint: Conservative parties and their impact on Canadian politics.
Lewis said Poilievre touted crypto in part to appeal to a certain segment of the Conservative membership and win the leadership.
“A lot of leadership candidates say things to appeal to the base. He was appealing to a very specific type of Conservative voter with this crypto pitch. I would say, based on Poilievre’s style, it would be very surprising for him to back down. He’ll just talk about it less,” Lewis said.
“He’s a political operator at his core. He was well aware what going on these YouTube talk shows would do for this brand. There were benefits and there were risks. He’s not naive.”
A number of right-leaning and libertarian-minded investors have championed cryptocurrency — a financial instrument that is loosely regulated in the Western world — as a way to reduce government control over money because the supply of cryptocurrency tokens is not set by an authority like the Bank of Canada or the U.S. Federal Reserve.
With its supply limited to just 21 million tokens, bitcoin boosters insist cryptocurrency is a hedge against inflation at a time when central banks are pursuing policies that dilute the value of cash.
Some of these right-wing investors have adopted the “cryptobro” label, a sometimes derogatory term for people who are dogmatic about crypto and its potential to change the world of finance.
“The question is if there will be political ramifications with a general election voter. Will the Liberals be able to stick Poilievre with bitcoin, with the convoy, with the World Economic Forum theories, and will that resonate with the moderate or non-partisan voters that decide elections?” Lewis said.
“This is an old Liberal playbook — scare tactics. We don’t know how effective it will be.”