Eternity Law International News Legal regulation of cryptocurrency in Canada

Legal regulation of cryptocurrency in Canada

Published:
June 20, 2018

Cryptocurrencies in Canada is as a way of payment, which is noted by a large number of installed bitcoin-ATMs.

Canada occupies the second position in the world after the USA. Here, developments are being actively pursued to better comprehend Blockchain technology. To this end, the government develops the digital version of the Canadian dollar.

Now regulators carry out adjustment of operations with cryptocurrency only if necessary.

CREATION OF BASE FOR REGULATION OF ACTIVITY

April 2013 marked the closure of accounts of crypto-exchange by some Canadian banks. Most likely, the reason for this was the lack of a license for the provision of services in the area of ​​circulation of funds. A license is a necessary condition for such a kind of activity, which could be the basis for a similar decision by banking structures.

Firstly, the Canadian Ministry of Finance does not recognize Bitcoin as a way of payment. However, the Bank of Canada pointed out that Bitcoin, do not pose a significant threat to the Canadian financial system.

Attention was drawn to the fact that such systems should be less controlled and regulated.

Despite the judgments of the Canadian Bank, questions regarding the regulation of the cryptocurrency activity have been actively considered. In April 2014, they initiated a briefing that dealt with the digital currency.

In addition, a publication was published where it was stated that the cryptocurrency is not a means of payment and does not fall under the modern concept of money.

The bill, which was proposed in June 2014, was approved by the Governor of Canada. He included the following items:

  • To exchange of cryptocurrencies are required to register with FINTRAC, as financial institutions;
  • The companies are obliged to enforce laws in the field of money laundering: notify the regulator of suspicious transactions, introduce user verification and the like;
  • The banks are not allowed to open accounts for cryptocurrencies that have not been registered with FINTRAC.

Equally important is the fact that the bill extends not only to exchanges, but also to companies. This includes organizations incorporated in Canada, as well as those that are registered in another jurisdiction, but provide such services in Canada.

TAXATION OF ACTIVITY WITH CRYPTOCURRENCY

The areas of activity with cryptocurrencies is a subject to taxation. In Canada, different payments can be made electronically, however, a tax charge is taken. If citizens want to implement the cryptocurrency, they pay a tax on profits or on capital gains.

A frequent phenomenon is the mining operations with digital currency. The commercial purposes of such an operation are also subject to income tax. As for the commercial component, its definition in each case is individual.

The possibilities for legal regulation of the use of crypto-currency in Canada are quite wide. This is ensured by legal norms that allow the regulator to perform the necessary operations.

Do you want to conduct legal regulation of operations with the cryptocurrency without difficulties? Call Eternity Law International, get quality advice and help!

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