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Digital Currency: You Can’t Flip This Coin!

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News Release

Regulation Only as Necessary for Digital Currencies

Ottawa, ON, Canada (June 19, 2015) – The best strategy today for dealing with digital currencies into the future is to tread carefully when it comes to their regulation, according to a report released by the Standing Senate Committee on Banking, Trade and Commerce.

“After 14 months of study and consideration, we believe that the best way to move forward with digital currencies is to monitor the technologies, particularly cryptocurrencies, as they evolve, while government organizations, such as Canada Revenue Agency (CRA), the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and police services, continue learning to navigate and use blockchain technology,” said Senator Irving Gerstein, Committee Chair.

“These new technologies may have innovative and as-yet unimagined applications and are at a delicate stage in their development and use.  We must tread carefully when contemplating regulations that might restrict and stifle their potential.”

To minimize the risks associated with illegal use of digital currencies, such as tax evasion, money laundering and terrorist financing, the Report, “Digital Currency : You Can’t Flip This Coin!,” recommends that the Government should require digital currency exchanges to meet the same requirements as other money services businesses in relation to Canada’s anti-money laundering and anti-terrorist financing regimes. Digital currency exchanges allow customers to convert state-issued currency into digital currency and vice versa.

The Report also examines the role that digital currency technologies, particularly the blockchain technology that underpins Bitcoin, can play:

  • In bringing financial services to the 2.5 billion people (one-third of the world population) who are “unbanked,” or, in other words, in increasing financial inclusion in  developing countries;
  • In better securing financial transactions by putting a person’s security and online identity into her or his own hands;
  • In reducing the costs of financial transactions; and
  • In helping governments to enhance the security of private information they hold.

“One key thing to understand here is that cryptocurrencies are so much more than just virtual cash - they’re the force behind a new way of interacting over the internet,” observed Senator Céline Hervieux-Payette, the Committee’s Deputy Chair. “An increasing number of organizations - including Microsoft, Dell, Amazon, Home Depot, Subway and Simon Fraser University - have embraced digital currency.  Today, you can buy a car, an airline ticket or even a sandwich with Bitcoin.

“The Banking Committee is confident that the implementation of our recommendations will have positive outcomes for consumers, merchants, digital currency-related businesses, Canada’s financial services sector and others.”

Digital currencies can be simultaneously viewed as a new currency, a new payment system and a new technology.  The Committee examined virtual currencies from all three perspectives.

The Report, which is the result of testimony from 55 witnesses at Ottawa Committee meetings and a fact-finding trip to New York City, contains eight recommendations.

Read the full report Digital Currency: You Can’t Flip This Coin!

To learn more about the Standing Senate Committee on Banking, Trade and Commerce, please visit the committee website at http://senate-senat.ca/banc-e.asp. Follow the Senate of Canada on Twitter @SenateCA and use the committee hashtag #BANC for updates on its activities.

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For more information or to book an interview, please contact:

Michael Krauss
+1 (416) 409-9748
michael@hartwellgroup.ca

Daniel Daigneault
+1 (819) 790-9344
danield@vl.videotron.ca

Keli Hogan
Committee Clerk
+1 (613) 949-4379
keli.hogan@sen.parl.gc.ca

Contact information

General Information:
613-990-0088 or 1-800-267-7362

Email: BANC@sen.parl.gc.ca

Mailing Address:
Senate Committee on Banking, Trade and Commerce
The Senate of Canada
Ottawa, Ontario
Canada, K1A 0A4