Canada Senate Study: Bitcoin Regulation Should Be "Almost Hands Off"

A recent report by Canada's Standing Senate Committee on Banking, Trade and Commerce recommends that digital currency businesses be regulated like money transmitters, but pushes for a "lighter regulatory touch" so as not to stifle development.

The 64-page report summarizes the findings of their 14-month investigation, highlighting both the risks and opportunities presented by digital currency.

It notes how digital currency can potentially be abused for tax evasion, money laundering and terrorist financing. Canada's financial crimes monitor, the Canada Revenue Agency and Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), would have to "prepare to navigate and use Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term technology."

Yet, it warns against over-regulating the industry, still at a "delicate stage" of its development. "This technology requires a light regulatory touch – almost a hands off approach. In other words, not necessarily regulation, but regulation as necessary," the report concludes.

With the recent development of blockchain technology for applications outside bitcoin's use as a currency, the report compares the merits and drawbacks for data security, particularly for banking and credit cards. For example, it cited TD Financial Group, which reported spending upwards to $200 million annually on cybersecurity. The bank said it is attacked thousands of times daily, highlighting that banks are not immune to such threats. Yet, the bank believes digital currency algorithms can eventually be hacked as well.

On the other side of the coin, the report cited Andreas Antonopoulos, a leading Bitcoin security expert who previously addressed the Canadian Senate on digital currency. He believes that decentralized digital currencies are less likely than centralized Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term systems to be successfully hacked because authority is not concentrated in a single entity.

The report contains 8 recommendations:

(1) The government should create an environment fostering innovation and minimize actions that may stifle development.

(2) The government should consider adopting blockchain technology to deliver services and enhance data security.

(3) Digital currency exchanges should have the same requirements as money services businesses.

(4) The government should work with other countries to formulate global guidelines, while preserving the "light touch" approach.

(5) Find solutions for the absence of banking services for digital currency businesses.

(6) The government should provide "concise information" to the public about the risks for digital currencies.

(7) It should also produce concise information for relevant tax treatment.

(8) The appropriateness of regulation should be assessed over the next three years.