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Ottawa banking committee recommends hands-off approach to Bitcoin legislation

Leadershipbitcoin, virtual currency, digital currency, digital payment

Ottawa has released its report on digital currencies, and its recommendation to the government is… to do nothing.

Well, in a way.

Among eight recommendations made in “Digital Currency: You Can’t Flip This Coin!“, the Standing Senate Committee on Banking, Trade and Commerce suggested first and foremost that the government “exercise a regulatory ‘light touch’ that minimizes actions that might stifle the development of these new technologies.”

“After 14 months of study and consideration, we believe that the best way to move forward with digital currencies is to monitor the technologies, particularly cryptocurrencies, as they evolve, while government organizations, such as Canada Revenue Agency (CRA), the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and police services continue learning to navigate and use blockchain technology,” said Senator Irving Gerstein, committee chair in a statement.  “These new technologies may have innovative and as-yet unimagined applications and are at a delicate stage in their development and use.  We must tread carefully when contemplating regulations that might restrict and stifle their potential.”

However, the report recommended that the government require that digital currency exchanges meet the same legal standards as other businesses dealing with money in order to mitigate money laundering, tax evasion, and terrorist financing.

Digital currency exchanges allow individuals to convert government-issued money into digital currency and vice versa and already exist in Canada.

 

The report looked at testimony from 55 witnesses in Canada as well as results from a fact-finding trip to New York City.

In full, its recommendations are:

1. The government should use a “light touch” in regulation to minimize actions that may stifle the development of the technology

2. The government should consider the use of blockchain technology when advantageous to deliver services and to enhance privacy

3. Digital currency exchanges should be classified as a specific type of currency exchange businesses that must comply with laws on money laundering and terrorist financing, with the exception of companies that “solely provide wallet services.”

4. The federal government, on an active and ongoing basis, work with other countries to formulate global guidelines for digital currencies

5. The Minister of Finance convene a roundtable with stakeholders, including banks, to look for solutions to the lack of access to banking services for digital currency related businesses

6. The federal government, through appropriate federal entities, provide concise information to the public about the risks of digital currencies and alternative payment systems.

7. The federal government, through the Canada Revenue Agency, provide concise information to Canadians about the tax obligations of digital currencies when received as income, held as an investment, or used to purchase goods or services.

8. Due to the evolving nature of digital currencies, the Standing Senate Committee on Banking, Trade and Commerce review this study of digital currencies and their associated technologies to assess the appropriateness of the regulatory environment in the next three years.