Canadian authorities support legal integration of cryptocurrencies

While most of the world's major states began to put up all sorts of barriers to the free circulation of Bitcoin and other cryptocurrencies, the Canadian government decided to take a completely different path.

Canada is the second country, after the United States, in terms of the number of bitcoin ATMs installed on its territory. But, unlike the Americans, Canada is precisely the country that views cryptocurrency not as a commodity, but solely as a means of payment. For example, the largest ATM operator in Western Canada BitNational has installed several dozen of its machines in Canada (there are already about ten of them in Edmonton alone). The equipment he installed allows clients to instantly convert their funds from regular currency to bitcoin, and back, with a 7% commission for each transaction. However, the limit for one such transaction is 1,500 Canadian dollars. And since the beginning of 2018, the KFC fast food chain has provided its customers with the opportunity to pay for orders using bitcoin.

Canadian government agencies, since 2015, have been trying to study the ever-growing demand of the population for the use of cryptocurrencies, trying to select the most lenient forms of regulation so as not to harm economic growth in the private sector.

The National Bank of Canada was the first to realize the full potential of bitcoin and decided to seize the initiative by creating a digital version of the Canadian dollar based on BlockChain. This idea eventually gradually grew into an absolutely working project for the development of the state cryptocurrency CADcoin, which received the special name Poject Jasper. In addition to the Central Bank, the largest Canadian commercial banks are also involved in the project - Royal Bank of Canada, Montreal Bank, TD Bank, Scotiabank, CIBC. Jasper participants plan to place their investments with the Central Bank, receiving in return CADcoin at a certain rate. The investment scheme looks like placing cash collateral in a special pooled bank account at BoC (Bank of Canada), which is then converted into CADcoin, after which the digital coin ends up in the accounts of system participants. 

For example, the Canadian regulator - the British Columbia Securities Commission (BCSC) - is constantly looking for approaches to companies that use blockchain technologies in their business activities. At the same time, the position of the regulator is more observational than imperative... The result of such loyalty on the part of the BCSC was the first license it issued in September 2017 to the Vancouver-based investment fund “Cryptocurrency First Block Capital Inc.”, which plans to attract investments in the bitcoin field. The regulator decided to extend a similar approach to the so-called ICOs (initial coin offerings), classifying ICOs as part of the register of licensed services or the so-called “standard sandbox.”

At the same time, the regulator’s requirements for major players in the field of cryptocurrencies remain quite stringent:

  - cryptocurrency exchanges are required to register with FinTRAC (Financial Transactions and Reports Analysis Center of Canada) as financial institutions;

    - companies must ensure compliance with laws in the field of AML&KYC: notify the regulator about suspicious transactions, implement user verification, etc.;

    - banks do not have the right to open accounts for cryptocurrency exchanges that have not been registered with FinTRAC.

Despite the generally loyal attitude of the Canadian authorities towards cryptocurrencies, transactions related to them are subject to taxes. Payment for goods or services with digital currencies is subject to taxation in the same way as barter transactions. Sales of cryptocurrency by Canadian citizens are subject to income or capital gains tax. Paying with cryptocurrency is commonplace for Canadians, but it is also subject to taxation, and the tax is levied in accordance with labor laws.

Be that as it may, Chinese miners, under constant pressure from their government, are considering Canada as a backup cyber testing ground for their mining equipment.  Once the global hub for the entire bitcoin industry, China is doing everything possible to bring cryptocurrency beyond its territory. After a successful hacker attack on local cryptocurrency exchanges last year, Chinese authorities began to literally squeeze out the vast community of Bitcoin miners from the country. This made them think about moving to other countries, and Canada became the most interested country in this. If such a move takes place, it will mean a real revolution in the local Canadian cryptocurrency market.