The Canadian government has been quietly moving to legalize virtual currencies such as bitcoin and ltc, but some of those regulations may be complicated.
In a new report, a group of international academics and researchers say the Canadian government should be doing a much better job of preparing regulations for virtual currencies.
“There is still a long way to go before bitcoin and other virtual currencies can be legally used in Canada,” said Ben Wieder, co-director of the Centre for Financial Innovation and a co-author of the report.
“For example, there are still some regulatory hurdles for virtual currency transactions in Canada, including a lack of clarity over how virtual currencies are taxed and whether the digital currency is subject to anti-money laundering (AML) requirements.”
Bitcoin is an online currency that exists independently of a central bank, which in turn allows users to exchange it for physical cash and other forms of money.
Unlike traditional currencies, which are issued by a central government, virtual currencies do not need to be backed by a national central bank to operate.
The cryptocurrency was first launched in 2009.
The CFI report said that virtual currencies should be considered as commodities, rather than as money, which is the primary definition for money in Canada.
In other words, the CFI believes the government should allow virtual currencies to be traded and traded in an exchange market for legitimate purposes, such as buying and selling services.
Virtual currencies are regulated under the Securities Act, which governs the conduct of companies and their dealings in securities.
But the CFAI said that it doesn’t know whether virtual currencies currently fall under the rules governing commodities, as well as other virtual and crypto-currencies.
“We don’t know the regulatory status of virtual currencies,” Wieders said.
“If virtual currencies were to be classified as commodities in Canada it would mean that they could be traded, but we don’t have any information about how that would work or how that might be regulated.”
It’s unclear how virtual currency companies will be regulated under securities law.
The report also said that Canadian authorities should establish a regulatory framework for virtual and cryptocurrency companies.
Wieder said that the government shouldn’t be using the word virtual currency to describe virtual goods and services.
Instead, the report called for an open-ended definition for virtual goods.
The lack of regulation around virtual currencies is a concern because the virtual and digital worlds have not been regulated by governments in the past.
Wiedermans research showed that the regulatory frameworks for bitcoin and virtual currencies aren’t comparable, and it’s difficult to distinguish between them.
“I think we have a lot of work to do in terms of understanding how virtual and virtual worlds interact with the physical economy and to be able to regulate them, to say they are virtual and they are commodities, they need to have a place to park money,” he said.
“It’s not the same as what people used to say about cash.”
In a statement to the Financial Post, the Canadian Digital Currency Association said that regulation for virtual money and virtual goods should be “part of a broader digital economy approach.”
“We welcome the CFO report’s recommendations to ensure that digital currencies are properly regulated and that virtual currency activities are fully supported by government,” the group said.
The group also urged the government to do a better job at preparing rules for virtual cash, which it said is already regulated under both the Financial Transactions and Reports Analysis Centre (FINTRAC) and the Canada Deposit Insurance Corporation (CDIC).
The group’s president and CEO, David MacLennan, said in a statement that it’s important to recognize that digital money is a new phenomenon, and its current regulatory framework needs to be considered carefully.
“While digital currency and digital assets are already regulated by Canadian regulators, the digital economy is still relatively young, and many of the key regulatory challenges are still in place,” he wrote.
“The CFAIC report should help policymakers consider the impact of digital money on the Canadian economy and the need for regulatory change.”
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