I invited Stuart Hoegner to do this guest post. He is a virtual currencies, gaming, and tax attorney and accountant in Toronto. He is also general counsel to the Bitcoin Alliance of Canada.
Recently an official from the Federal Department of Finance apparently indicated in an email to a media outlet that bitcoin is not legal tender in Canada. That was cause for David George-Cosh to suggest that Canada was "putting a question mark over the use of" bitcoin in Canada in this Wall Street Journal post.
In my view, the comment from Finance does nothing to inhibit bitcoin's growth, acceptance, or adoption in Canada. It just affirms subsection 8(1) of the Currency Act, which provides that a tender of payment is a "legal tender" if made in current coins issued by the Royal Canadian Mint (or by a province before it entered Canada) or in notes issued by the Bank of Canada. In other words, a "legal tender" is Canadian fiat money only. But nothing in the Finance statement means that any new class of persons cannot now accept or transact in bitcoins.
This shouldn't have any impact on bitcoin's presence or popularity in Canada, nor on the prospects for regulating transactions denominated in bitcoin.
Bitcoin -- the virtual currency and global payment system -- is coming off a banner year. In 2013, we saw an explosion in the price of bitcoin from around US$13 to highs of over US$1,100 (see CoinDesk chart). Overall interest in virtual currencies soared. The business applications and innovation in the coming year may show that we have, to date, merely scratched the surface of what this technology can offer.
Many countries are considering how and when to regulate this technology and its instrumentalities. Canada is no exception and, in certain respects, is at the front of the pack.
What's Happening and Not Happening in Canada
Canada has a number of vibrant groups across the country seeking to network bitcoin entrepreneurs and developers and push their ideas forward. We are home to some of the most active bitcoin visionaries in securities models, ATMs, and exchange services. Indeed, one of the first bitcoin ATMs in the world was rolled out to retail consumers in Vancouver, with recent ATM launches in Toronto and Ottawa supporting the trend. This country is also attracting those looking to new frontiers in virtual currency and how future versions can improve on bitcoin. At the Bitcoin Alliance of Canada, our executive and members are working to educate and inform Canadian consumers, merchants, and policy makers of the existence and merits of bitcoin.
It's not too much to say that Canada's a hotbed of activity. We have first world infrastructure and a stable justice and taxation system. Canada also has regulators that have generally been content to carefully evaluate if and how bitcoin transactions should be regulated here. Whether this is by design is anyone's guess, but it may be borne of a cautious approach to rule- and policy-making, and has likely allowed some room here for innovation. (It's not all good news; Canada's chartered banks are generally hostile to bitcoin, and getting made-in-Canada banking solutions is a challenge.)
This year should be interesting. We won't figure out all of the ways that bitcoin can and should be regulated in Canada. But entrepreneurs in the sector -- in Canada or anywhere else -- won't wait for that; innovation will keep moving and show us the way forward in this exciting sector.
Thanks Stuart. Our friend Michael Perklin highlights these additional signs of Canadian bitcoin innovation:
- We have more bitcoin ATMs than in any other country.
- The Federal Government has issued guidance on how to tax bitcoin rather than taking steps to crush it.
- A national alliance, The Bitcoin Alliance of Canada, is actively working to promote and protect Bitcoin across Canada (see BAC's opposition to attempts to trademark Bitcoin).
- Two innovation centres, the Bitcoin Embassy in Montreal and Bitcoin Decentral in Toronto have opened, dedictated to all things bitcoin.