There’s A Virtual Currency Provision In The 2014 Federal Budget Implementation Act
Last Friday, Canada’s new Minister of Finance Joe Oliver presented the first of two 2014 budget implementation bills to the House of Commons. The bill, that was tabled, was written by recently-resigned former Minister of Finance Jim Flaherty. Flaherty has previously revealed his negative view on Bitcoin in a speech about his 2014 budget implementation plans. As has become increasingly prevalent in the last few decades, the biannual budget implementation bill often becomes bloated with “unrelated measures” that are pushed through the House of Commons on the ruling party’s agenda. This year, nestled with provisions that would change ‘the Canadian Navy’ to ‘the Royal Canadian Navy’, is a provision about virtual currency.
The full text of the new Budget Implementation Bill can be found here.
The “Virtual Currency Provision” of the recently tabled Omnibus Federal budget implementation bill (emphasis mine):
– Allows the government to police online casinos, and requires dealers of virtual currencies, such as Bitcoin, to report suspicious transactions, or those over $10,000, to a government watchdog.
Though the proposed budget implementation bill will likely receive some changes from the opposing party in the House of Commons before it becomes the 2014 budget implementation act, it is incredibly unlikely that the “virtual currency provision” will be touched. Canada will either establish a new government watchdog or rule that virtual/digital currencies suspicious activities are under the jurisdiction of an already extant agency.
The goal is to force Canadian Bitcoin exchanges to operate more like banks, reporting any transactions larger than $10,000, to a government watchdog. In the mind of governments everywhere, transactions larger than $10,000 are automatically suspicious. Needless to say, some Canadians may not be OK with that particular interpretation forced upon the inherently free digital currency community. On the other hand, compliant virtual currency dealers/exchanges should already be keeping track of fiat transactions larger than $10,000 for tax and AML/KYC compliance purposes, this merely expedites the reporting process.
Senate Banking Committee Set To Study Digital Currencies, BitcoinAs revealed by Senate Banking Committee member Doug Black in a blog post on 3/25/14, the Senate Banking Committee has recently started to study Digital Currencies, and Bitcoin before attempting to craft comprehensive legislature. Last Tuesday, the Senate approved the following study mandate:
That the Committee be approved to examine and report on the use of digital currencies in Canada and report on their risks, threats, and advantages by June 30, 2015
In the coming months, the Senate Banking Committee will receive testimony from academic, financial, and government experts from across Canada. The committee plans to hear from both detractors and supporters, so they can properly weigh the risks and merits of Digital Currency. The end result will be a series of recommendations on the use of Digital Currencies in Canada.
Senator Black went on to say:
By analyzing the use and regulation of emerging digital currencies, such as Bitcoin, the Senate can make an important contribution to keeping Canada ahead of the digital currency curve.
As the committee continues to hear from academics, economists, and leaders in government and banking, I will update this blog post with new information on our findings.
The Early Days Of Regulation
Former Mayor of Ottawa Larry O’Brien, arguably the most up to date Canadian politician in regards to Bitcoin, had this to say:
The Canadian Government is in the early days of regulation and it seems to me that Canada will likely follow the U.S. as it relates to taxation. Regulations will likely be different as it relates to exchanges and wallets because our Government is open to financial technology innovation.
For now, Canadian Bitcoiners will have to wait until July of 2015 to hear what guidelines the Senate Banking Committee comes up with regarding Digital Currencies. It will be even more interesting to see specifically what legislation comes of the committee’s research. In the meantime, Canada has not targeted any of the large Bitcoin services, such as Havelock, that reside within its borders. In fact, many Bitcoin startups, such as Bylls, are rising up in Canada to harness the growing Bitcoin economy to the north.