Years ago, cryptocurrency felt like a momentary phase—something anarchic and niche that would create a momentary splash across the headlines before fading into obscurity (or at least into some distant corner of the dark web). Today, we know that this is far from true: cryptocurrencies are here to stay, and they continue to revolutionize the way we spend and invest. Not only that, but the underlying blockchain technology is being applied to sectors far and wide, from financial services to healthcare to journalism. It’s no wonder governments are finally paying attention.
As cryptocurrencies enter the mainstream, the Canadian government is taking strides to embrace this new wave of digital currency. As Canada is well-positioned to become one of the world’s global hubs in the cryptocurrency industry, our government will need to figure out how to monitor and tax transactions without undermining the companies driving this innovation.
How nations are regulating the wild west
Countries around the world are integrating cryptocurrencies into their financial and legal systems. Switzerland, for instance, is readily embracing the space. The nation has a successful ICO market; in 2017, the country’s ICOs raised more than $550 million from investors for the purpose of funding cryptocurrency, illustrating the country’s desire to be known as a “crypto-nation”.
Other nations are embracing crypto in a variety of ways. In Estonia, the nation is introducing an “e-residency, identity, and credit registry” which would run on a blockchain network. The United Kingdom has launched a “cryptocurrency task force”: a fintech strategy to ensure the nation stays competitive within the cryptocurrency space, while also providing a wireframe for what regulation would entail.
While cryptocurrency is massively popular, governments are drafting up regulation to set an industry standard for this uncharted territory. The recent G20 Summit included public discussion of cryptocurrency and how governments around the world would implement regulations. A July 2018 deadline has been set for nations to bring forth their ideas for implementation to best serve investors, financial institutions, and law enforcement—the results of which may determine how many countries choose to regulate and respond to the industry moving forward.
Canada’s move to embrace innovation
As things stand, Canadian lawmakers aren’t making any rash decisions when it comes to overhauling regulations regarding cryptocurrency. A look at the Canadian stock market shows that the country is getting the world’s first major stock exchange cryptocurrency desk, which will be operated by the TMX Group. The TMX’s venture, in partnership with Paycase Financial, a trustware provider for decentralized financial services, illustrates the progress that cryptocurrency has made within Canada’s financial sector.
Paycase Financial CEO, Joseph Weinberg, notes that this partnership is significant because “it signifies what a flourishing startup community and a set of large institutions can do when they collaborate and work together to build the financial world of the future. Canada’s tight, cohesive startup scene, institutions and regulatory environment is a model for the world stage… it demonstrates that Canada is open for business.”
Moreover, according to finance minister, Bill Morneau, the government has no plans to change how cryptocurrency is treated by law. At the World Economic Forum, Morneau announced that Canada would be partnering with Accenture on a blockchain traveller ID program.
This doesn’t mean that there won’t be any regulation at all. Canada’s Standing Committee on Finance (FINA) recently held hearings regarding the consideration of how to best handle cryptocurrency in a way that would be fair to many parties. While ideas were bounced back and forth, it will take time for something concrete to take effect.
Good news for investors, too
The cryptocurrency market has skyrocketed. Over the last 12 months alone, altcoins have been soaring: Litecoin saw a 6,000% increase and Dash saw an 8,000% increase. To better understand these gains, the S&P/TSX Composite index provided a return of 3.5% in the last 12 months, whereas Bitcoin provided a return of 1,500%.
Moreover, some of Canada’s largest banks allow their customers to buy cryptocurrencies with debit or credit cards. TD Bank, for instance, says that it permits such activity “as long as the merchant is authorized” and the transaction isn’t fraudulent.
Despite any future regulations set forth by the Canadian government, cryptocurrency is slowly weaving its way into the fabric of our society through industry disruption and innovation.
The country will need regulation that is well balanced in order to boost new projects, rather curb them. One thing is for certain as Canada continues to assert itself as a world leader in cryptocurrency: anyone who doesn’t invest in the industry today will be kicking themselves tomorrow.
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Photo Credits: Shutterstock / Jean-Claude Caprara