Canadian Senate Reports on Digital Currencies

by , Jun 18, 2015 | 2:18 pm

Lately, when many Canadians think of the Senate — our unelected upper house of Parliament — they think of the Senate expense scandal (or possibly other scandals) which may be an issue in the general election this fall. That’s unfortunate, as today the Senate Standing Committee on Banking, Trade and Commerce released its report on Digital Currency.

The Committee offers a number of welcome, measured, and moderate proposals.

The very first recommendation exhorts the Canadian government to “create an environment that fosters innovation for digital currencies and their associated technologies” and “exercise a regulatory ‘light touch.'” That’s certainly welcome given the innovation that’s taking place in the space in Canada and the cryptocurrency businesses that are being started and acquired here.

What of the extent of changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act enacted last year? There has been some discussion of how far these changes will reach in the exchange community. The Senate seems to suggest that they be limited to what they and other witnesses before the Committee called the “on and off ramps:” that is, business facilitating exchanges between fiat money and digital currency. This may mean that cryptocurrency-to-cryptocurrency models are excluded, at least in the Senate’s approach. If crypto-to-crypto is to be left out of the regulatory framework of the PCMLTFA, that is to be applauded.

The Senate also recommends an international approach to formulating global guidelines for digital currencies, all while respecting the “light touch” that they suggest. This is to be expected given the increasingly international nature of regulation of all types. Another recommendation suggests that we look for solutions to the lack of access to banking services in Canada for digital currency businesses.

The report proposes that the Canadian government provide “information to the public about the risks of digital currencies and alternative payment systems,” which the government has already been doing, so that’s nothing new.

Whether and how this report will have an impact on new regulations being written by the Department of Finance under the PCMLTFA — and on the government’s agenda for cryptocurrency in Canada more generally — is too soon to say. But we now have the result of a long, hard, and public look at cryptocurrency by a parliamentary committee. And many of its recommendations should make bitcoin enthusiasts smile.

Comments are closed.