The peer-to-peer decentralized digital currency bitcoin can be found all over the world, whether it’s in China, the United States, Europe and elsewhere. It’s a virtual currency that can be sent to anyone anywhere across the globe at any time.
When it comes to capital investment in bitcoin companies, Canada is the second most popular destination for venture capitalists and angel investors, according to a new report by the Canadian, non-partisan think-tank Montreal Economic Institute.
The five-year-old virtual currency has been gaining a lot of momentum in recent months after having several major setbacks. However, the think-tank warned that without government regulation and bitcoin’s association with illicit transactions and criminal activities then it could hinder it’s potential growth and development in Canada.
“In order for it to develop its potential and be adopted by a growing number of users, clear rules are required, along with some kind of governmental acceptance," study author David Descoteaux said in a statement.
Descoteaux added that there needs to be federal legislation in order to facilitate transactions between financial institutions and private bitcoin firms. He cited Germany as being a perfect example of the type of rules and regulations that need to be imposed.
“These clear rules, as well as a tax treatment that allows bitcoin to be used as a currency, explain why the digital currency is popular in Germany and why this country was one of the first bitcoin hubs,” stated Descoteaux. “Canada has so far been quite welcoming to bitcoin, and in clarifying its own regulatory framework, it should ensure that it remains so."
In recent months, Canadian banks have either suspended accounts or shut them down entirely if the clients are affiliated with cryptocurrencies. For instance, earlier this year, the Bank of Montreal did not deem bitcoin worthy of its services as it closed down all bitcoin-related business accounts across the country.
The account shutdown was attributed to then-Finance Minister Jim Flaherty’s remarks during the release of the 2014 federal budget that bitcoin and other digital currencies pose a threat to financial institutions in Canada.
“It is important to continually improve Canada’s regime to address emerging risks, including virtual currencies such as Bitcoin, that threaten Canada’s international leadership in the fight against money laundering and terrorist financing,” said Flaherty in February.
At the time of this writing, the Bank of Canada, the federal government or the Office of the Superintendent of Financial Institutions do not regulate bitcoin or any other virtual currency The Canada Revenue Agency (CRA) classified bitcoin and others like it as another commodity and would be subjected to taxation.
The value of bitcoin has surged in the past week from under $450 to as high as $570.