Vancouver City Council Passes Bitcoin Reserve Asset Motion

On December 11, Vancouver councilors voted in favor of Mayor Ken Sim’s motion to make the city “Bitcoin friendly” and give staff the authority to hold the cryptocurrency in reserve.

Mayor Ken Sim, who has served as mayor of Vancouver since 2022, told CBC that he thinks it’s fiscally responsible to invest in Bitcoin (BTC) during a time of inflation and market volatility, and even agreed to donate $10,000 worth of BTC to the city did. from their personal assets. City officials will now study to see if BTC can be incorporated into the city’s financial strategies and invest in the cryptocurrency by converting some of Vancouver’s existing financial reserves.

The motion stated that the City of Vancouver would be “irresponsible” if it did not consider the “merits” of including BTC in its strategic assets to preserve the city’s financial stability. Limited to a supply of only 21 million coins, BTC is often described as a digital version of gold and can serve as a store of value protected from inflationary pressures.

Today, Vancouver City Council approved the 2025 budget, providing a tax increase of just 2.9%; Additionally, an additional tax of 1% was allocated to the renewal of critical infrastructure such as water and sewer lines.

We are investing in a stronger, safer and more affordable city without disruption… pic.twitter.com/owtQMeSJmC

— Mayor Ken Sim (@KenSimCity) December 10, 2024

The mayor said he sought advice from the city’s auditor general before formulating his motion. Prominent speakers included experts like Victoria Lemieux, head of the Blockchain research cluster at the University of British Columbia, whose support for the council’s decision was a no-brainer. However, there are concerns about the environmental footprint of BTC mining as well as the volatility of the cryptocurrency, making it a questionable option for city financial reserves. Lemieux also told CBC that “mining BTC will require a lot of energy.”

Can Bitcoin be used as a reserve asset in Vancouver?

The Bank of Canada’s Currency Act prevents cities from sending BTC as payment for local expenses or even holding it as reserves because they are limited to investments that do not impose financial risk. It goes on to explain that the only legal currency is physical money, such as notes and coins, issued and minted by the Bank of Canada or the Royal Canadian Mint. According to the Canada Revenue Agency, cryptocurrency is considered a commodity and not money under Canadian law.

However, Section 27.1 of the Bank of Canada Act. This article allows the Bank to establish a special reserve fund to cover unrealized valuation losses arising from movements in the fair value of the Bank’s investment portfolio. Although this provision does not directly address cryptocurrencies, it creates leeway regarding assets that the Bank of Canada may consider. While regulatory changes are necessary, Vancouver’s proposal signals a potential shift towards integrating BTC into formal financial portfolios. Therefore, the motion may indicate that Vancouver is ready to challenge the current status quo.