Launching a token as a Canadian business is possible and the legal environment is better now than probably any time in the last decade. This is a legal take that probably hardly any lawyers in Canada share, and I hope that this blog post changes their views. If you're a skeptic and your view isn't changed, at least you'll see the rationale for a different point of view: that tokens are legal, can be launched in Canada, and can be genuienly an advancement over the non-digital world.

Over the next week or so I'll be posting a series of blog posts explaining why I have this view. This will be a series because there's no such thing as a token. There's a variety of different types of tokens, with different attributes that determine their legal risk. This is obvious to industry watchers, and is being made clear in US guidance that's no longer simply painting tokens with the broad (negative) brush of security. There's a recognition now at the federal level in the US that nuance is the name of the game, and that digital assets aren't de facto illegal. And what happens in America soon comes to Canada.

Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets

The most recognition of the nuance of tokens comes in the form of a 68 page report published jointly by the SEC and CFTC. This guidance was news to many, but not to practitioners, who've been talking about these points for years. This is now the phase where a new consensus develops, and technologists/business people can start to think about launching tokens in their home jurisdiction, rather than going abroad. The American view is not unique to the American legal landscape, and the change in view in the States shows how views, rather than hard law, have driven a lot of the discussion over the last decade. The same is true in Canada.

The Cayman Foundation Path: The Status Quo

The de facto choice for token projects of the last many years has been the Cayman Islands. I've helped set up numerous foundations, and they've successfully launched digital assets that have been used by hundreds of thousands or millions of people. These are now well-worn paths that are great for Canadian founders and participants, but it's too narrow to say that this is the only path.

There's downsides to going abroad, including costs, challenging legal forums for disputes, stigma against offshore, banking difficulties, and more. This blog post series isn't a campaign against the Cayman Foundation structure (which I think is great, and has often been the best choice for token projects), but rather an exploration of pursuing what most people think is a non-starter: launching a token in Canada.

2026

American guidance helps to show where Canada will go. But people overestimate the degree to which regulatory guidance in Canada even applies to the tokens they have in mind. Hostile regulators have managed to scare people more than they've made the case that tokens writ large can't be done. I hope this series of posts gives people a chance to reflect on how right that commonly held view is, and think more about what can be done in Canada. Because the potential for digital assets is enormous, and growing.

For all the ups and downs of markets, the trend of technology is clear: upwards. Stablecoins have dramatically expanded in recent years, from a niche market used by crypto traders for arbitrage to a multi-hundred dollar billion business globally. That's just one of the areas where digital assets are showing their worth. Where else? As means of monetizing smart contracts like DEX systems, rewards layers, decentralized debt systems, and more.

Recently there's been a raft of launch of tokens for stocks and the S&P500 (which I won't be covering in the next few posts because that's a novel system that's so far been confined to offshore launches). Tokens with useful applications are booming, as people finally start to figure out how to use them properly. More importantly, the infrastructure has been developing over the last years such that tokens can take advantage of the extensive tool and infrastructure on Solana and Ethereum.

Useful Tokens And New Possibilities

Tokens are going beyond the failures of the 2017/2018 ICO boom that was mostly composed of useless tokens that were poorly understood (or fraudulent). Over the next few years I think they'll be a new wave of innovation in this space, whether driven by RWAs (real world assets), smart contract monetization, or other angles yet to be developed. There's gold tokens (XAUT), S&P500 tokens (SPYx), stablecoins (USDC), and DEX fee-sharing tokens (RAY) that didn't exist back in 2017-2018.

While many people are only aware of the hype, frauds, and get rich quick schemes that easily makes the news, there's been billions poured into developing new models, and they're starting to bear fruit. Canadians are already a part of this, but the current consensus is that they can only be a part of it through offshore structures. I think that view is incorrect.

I think there's a lot more that can be done in Canada, and with the right approach, by the right people, someone will clearly show the consensus to be wrong, and now's the right time to do it. The rest of this series will explain why by looking at the guidance in Canada, the laws, technological developments over the last five years, and what's happening abroad.