There’re not too many countries in the world with a friendly stance towards cryptocurrencies. Canada, however, is among the minorities. And while this North American country is not entirely pro-crypto, it’s much better than others and there’re several things that other nations (including ours) can learn from it to regulate cryptocurrencies easily. In this article we’ll take a look on how Canada regulates cryptocurrencies without complicating things too much. Let’s get started:
Current Legal Status of Cryptocurrencies in Canada
Cryptocurrencies are legal in Canada for trading, but not for payments. The country has one of the most straightforward approaches when it comes to cryptocurrency regulation. The currencies are regulated under Bill-C31, which was approved by Canadian parliament way back in 2014. Much like Singapore, Canada Revenue Agency (CRA) treats Bitcoin and other cryptocurrencies as commodities. Crypto transactions are therefore treated as barter transactions, and income generated from trading or transaction activities considered business income. The taxation part also varies depending on whether an individual is running a buying-selling business or is concerned with investing alone.
Crypto exchanges in Canada are recognized as money service businesses, which makes them subject to anti-money laundering (AML) and counter terrorism financing laws. The exchanges are required by law to register with Financial Transactions and Reports Analysis Centre (FINTRAC). And they’re also required to keep certain records, report suspicious transactions to authorities and follow other compliance rules strictly.
Cryptocurrency Regulation in Canada: Recent Developments
Canada was the earliest nation in the world to adopt a national law on cryptocurrencies. When its parliament approved Bill-C31 in 2014, there was no other nation whose example they could’ve taken for drafting their bill. They did it completely on their own, and they did it exceptionally well. With minimal resistance they just tried to ensure that cryptocurrencies are not used for wrong purposes. This made the task of drafting their regulation simple.
Since then country has come a long way, and it has also considered the idea of having a thorough legislature to regulate cryptocurrencies. Recently some developments took place on that front as well. For example:
- In August 2017 Canadian Securities Administrators (CSA) had suggested that Canadian Securities Law may be potentially applicable to cryptocurrencies as well.
- Similarly, in January 2018 Head of Canada’s Central Bank Stephen Poloz had expressed his disdain with the term “cryptocurrencies” by saying that“they’re crypto but they’re not currencies”. Moving further, he had added that technically cryptocurrencies are securities.
- And most recently, Ontario Securities Commission (OSC) started examining the business activities of several exchanges on the concern that they were allowing trading in tokens that would otherwise qualify as securities.
In a nutshell, Canadian government is generally friendly towards cryptocurrencies since a long time, but it wants to bring them under the regulation of Canadian Securities Law.
Future of Cryptocurrency Regulation in Canada
Canada has always been friendly with cryptocurrencies, so we can expect things to remain so. While some particular types of tokens may be brought under the securities law in future, it’s unlikely that this country will unnecessarily complicate things. It’s one of the best countries for crypto community, and hopefully it will remain so in days coming ahead as well.