The Canadian cryptocurrency industry should be one of the strongest in the world, being the birthplace of Ethereum, close to the US market, a good bridge from China/HK, generous tax credits for R&D work, and many other advantages. But the industry has been plagued by a poor understanding of regulatory issues, unusual viewpoints put forward to government, and repeated work that ought to be shared. These problems could be addressed through the creation of a Canadian self-regulatory organization (SRO).
What would a crypto SRO do? Provide and enforce best practices, share knowledge, and boost the industry as a whole, to the benefit of its members and Canadians.
Sharing Knowledge
Too many companies undertake expensive legal work or engage consultants to do what others have done on basics that aren't truly specific to their company. Too many companies grapple with the same regulatory guidance (often vague or written in legalese) and have concerns about how various branches of government will affect their business. Although trade groups like the Digital Chamber of Commerce fulfill some of the need, there's a significant base level of support that's missing. Companies could be sharing their expertise in a way that reduces their own operating cost and reduces their anxiety about government actions.
Consumer Protection
A crypto SRO could also have a consumer protection role through the creation of a fund that could compensate customers in the event of a dispute with a dealer/exchange. It could potentially arbitrate some disputes through non-legal means (e.g. ombudsman role). And it could set (and enforce) standards for what consumers should expect in terms of minimum standards.
Information Exchange
A crypto SRO could be a forum for sharing information about engaging with law enforcement and emerging threats. Criminals are creative and constantly targetting players in the cryptocurrency industry - it's in everyone's interest to share that knowledge to deter crime.
Best Practices
There are emerging best practices about how to work with different blockchains, how to secure cryptocurrency in cold storage, and many other aspects that aren't "secret sauce" so much as basics that are required. These practices could be shared between the members so that each can learn from each other without compromising their competitive position.
Negotiated Rates
Many virtual currency dealers source their cryptocurrency from the same large players. Could an SRO help smaller players to negotiate a better rate for volume cryptocurrency deals? This might seem an unusual role for an SRO, but a project like this could only be successful if it looks as the needs that exist and tries to address them on a group basis.
Tax Credits and Government Programs
Government often looks to industry for solutions. It's easier if there's a single point of contact that's perceived as being more neutral than the constituent companies, and the government has specific needs that they're willing to pay to solve. A crypto SRO might help as an avenue to more government involvement (including R&D support programs), to the benefit of the member companies. And it could serve as a clearing house for information about relevant tax incentives and best practices (e.g. SR&ED).
Increasing Investment
A standards-based crypto SRO would likely give comfort to investors so that they can better channel their funds. A strong focus on improving operations is exactly the commitment that serious investors want to see and it would help with filtering their opportunities. Many great companies in this space are hard to find and a crypto SRO would give them a public presence. Boosting investment is in everyone's interest, and it's often the case that cryptocurrency companies aren't in need of investment so this would likely work out better than in other areas of tech.
Fielding Experts
A vetted list of experts would go a long way toward ensuring that knowledgeable people are out there informing government, major corporations, and the public. A crypto SRO wouldn't necessarily supply the speakers, but they could provide a vetted place to find them, which would be a big improvement on the status quo. A simple list vetted by the leaders of crypto companies in Canada would be a great resource to develop.
Coordinated Initiatives
Many great ideas are beyond the resources or skills of any particular player. A crypto SRO could coordinate their activities to take on bigger or different projects than what can be handled individually. A coordinating body is needed.
Why Hasn't This Happened?
I've been approached over the years by several groups interested in taking on this role who hav wondered why it doesn't exist yet. The greatest challenge that they've faced is that the industry is fragmented and the people involved have very different interests. Sometimes they're difficult to deal with, and they're often quite comfortable forging their own path without relying on other people.
There isn't really a single cryptocurrency industry in Canada that can be unified, but it might be possible to assemble coalitions of specific players like virtual currency dealers or network developers. The key would be to put forward a specific list of benefits and then deliver enough value created by the pooling of resources that it would justify the cost of the crypto SRO. This is an industry of entrepreneurs who are keenly aware of value.