By
Mayowa Adebajo
March 12th, 2024
On Friday, a Senate committee in Canada advised the government to “tread carefully” in regulating Bitcoin and other digital currencies.
The Senate committee called for the Canada Revenue Agency and Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) “to prepare for the growing use of such virtual currencies,” reads The Economic Times.
“We’ve heard, and we agree, that blockchain technology is at a delicate stage in its development and use,” the committee’s report reads. “This is why we urge the Government to explore the vast potential of this technology, while treading carefully when contemplating regulations that may restrict and stifle its use and development.”
Moreover, the committe urged the government to educate the public about the tax obligations of digital currencies when received as income, held as an investment, or when used to purchase goods and services.
“This technology requires a light regulatory touch, almost a hands-off approach. In other words, not necessarily regulation, but regulation as necessary.”
The Canadian Bitcoin Alliance praised the Senate’s conclusions. The Alliance said that the Senate saw “the potential it (Bitcoin) has for Canadians.”
Over the past 18 months, the committee heard from 55 witnesses such as Canada’s central bank, police, securities regulators, individuals, payment card operators, and others. Senators said that the Bitcoin community’s witnesses were “passionate and optimistic.”
Witness Victoria van Eyk, head of community outreach for ChangeTip, was not surprised at the report’s recommendations.
“The senators we talked to were very wary of more regulations and expressed concern about the effect of regulations on stifling innovation,” said Victoria.
“The committee made it clear to us that they wanted nothing to stand in the way of Canada becoming a world leader in developing new financial technologies.”
So, according to the committee, the use of virtual currencies permits customers to better protect their internet security. Plus, customers’ need for banks to carry out their transactions decreases.
“Our committee was told that by cutting out third parties, blockchain technology can give consumers and governments a more effective level of online security,” Sen. Irving Gerstein said during a news conference.
“However, there are two sides to every coin — even a Bitcoin,” said Gerstein. “The power offered by blockchain technology for people to protect their identity has a flipside.”
So, the committee draw attention to the risk that the technology behind Bitcoin could be used to launder money or finance terrorist activities, reports Times Colonist.
“We recognize that these new technologies may have other innovative and, as of yet, unimagined applications, and we are at a delicate stage in their development. Accordingly, the committee has concluded that the best strategy dealing with digital currencies is to tread carefully when contemplating regulations so as not to stifle innovation.”