Canadian authorities have decided to ban political donations in crypto.
The amendment to the Canada Elections Act was submitted on March 26 as part of Bill C-25, and aims to permanently close potential channels for untraceable foreign funding.
Canada proposes strict sanctions of up to $ 100,000 for defaulters
The law prohibits cryptocurrency contributions to party political activities, advertising, and opinion polling. The ban will also be extended to money orders and prepaid payment products due to concerns about traceability.
“No principal agent for a registered party, financial agent for a registered association, official agent for a candidate, or financial agent for a nomination or leadership candidate shall receive a contribution that is in the form of [digital assets],” it states in the submission.
The ban includes the entire political ecosystem, including parties, associations, candidates, leadership campaigns, and third-party actors.
According to the new rules, political agents must either return crypto donations to the donor or destroy the asset within 30 days.
If the assets cannot be returned, third-party actors are required to exchange these for fiat currency and hand over the funds to the chief electoral officer, who then sends the amount to Canada's auditor general.
The penalties for breaking the rules are severe. Those who knowingly receive crypto donations may face fines of up to double the value of the donation. Companies involved in such activities risk even higher penalties: an automatic fine of $100,000 in addition to the double-value fine.
Canada's political attitude shift does not happen in a vacuum. The legislation resembles the recent ban on crypto donations to political parties in the United Kingdom.
These measures stand in stark contrast to the U.S., where the crypto lobby has largely commercialized the political landscape.
The American crypto industry has already spent over $273 million to influence the outcome of the upcoming midterm elections, according to data from Follow The Crypto.
The disagreement highlights a fundamental difference in political mechanisms. In the U.S., crypto giants like Coinbase and Fairshake use their large financial muscles through super PACs to conduct advanced advertising campaigns supporting pro-crypto candidates.
If Bill C-25 is passed, it ensures that the Canadian electoral system remains protected against the race for digital assets that is now affecting the neighboring country to the south.