Canada's failed digital currency venture cost millions of dollars: report

The failed MintChip program in 2016 prompted then-finance minister Bill Morneau to strip Mint managers of authority in launching any new ventures without cabinet approval.

Canada's failed digital currency venture cost millions of dollars: report
Jeff Whyte - stock.adobe.com and The Canadian Press / Adrian Wyld
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According to figures released by the Royal Canadian Mint on Tuesday, a failed Canadian digital currency venture cost millions of dollars.

"We have nothing to add," said Mint spokesperson Alex Reeves. "We do not segment the reporting of operating costs nor investments by business line." 

Management would not comment further as they consider financial information strictly confidential, reported Blacklock's Reporter.

According to corporate records, Mint spent roughly $34.3 million on the venture, launched in 2012 to facilitate a "new era" in currency. They estimated costs at $29 million for the project's unrecovered research and development costs.

Blacklock's Reporter claims the costs reflect the filing of eight patents, production of sales videos, a doubling in the hiring of research scientists and a $50,000 cash prize to software developers to design a MintChip app. 

In 2015, Mint sold MintChip — its custom-made digital currency — to private investors for $16 million. 

"In December 2015, the company closed the sale of MintChip for a cash consideration of $5 million paid at closing and an $11 million, four percent interest-bearing secured promissory note with interest payments due semi-annually," said the Annual Report. They did not receive the principal $11 million due last December 16.

Mint executives hailed the program as groundbreaking. Canada was "the only mint to have initiated research and development related to the evolution of physical currency," then-CEO Ian Bennett said in 2012.

"Money as we know it is fine today, but tomorrow is a different story," said one Mint promotion. MintChip was described as "better than cash since you can use it online."

In 2013, the Bank of Canada disbanded the program. The central bank has a legal monopoly over the distribution of money under the 1934 Currency Act and earns $1.6 billion a year through the circulation of banknotes, by official estimates.

Mint managers spent two years searching for a buyer for the program, and kept its net losses private.

The failed MintChip program in 2016 prompted then-finance minister Bill Morneau to strip Mint managers of authority in launching any new ventures without cabinet approval. 

"While the Mint operates in part on a commercial, profit-oriented basis, as a federal Crown corporation, it is an instrument of public policy for which the Government is ultimately accountable to Parliament and Canadians," Morneau wrote in a Letter Of Expectations.

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