The Bank of Canada (BoC) recently published its latest Financial System Review, and perhaps one of the most revealing statistics of the report was that 13 percent of Canadians own Bitcoin and “most Canadians are aware of Bitcoin.”
“The share of Canadians owning Bitcoin rose from 5% in 2018–20 to 13% in 2021. This increase occurred following widespread increases in the savings and wealth of Canadians during the pandemic,” the BoC wrote in a blog post. “At the same time, some fintech companies began to offer cryptocurrencies alongside traditional investment products, providing consumers with a wider range of accessible and user-friendly platforms to buy Bitcoin. The results of the survey also revealed that Bitcoin purchasers in 2020 and 2021 relied increasingly on mobile apps to buy their Bitcoin. Purchasers used mobile apps much more than web-based exchanges, mining or visiting a Bitcoin ATM.”
That is not all, though.
When Canadian crypto-related exchange-traded funds (ETFs) were released throughout 2021 – beating the United States in launching a crypto ETF! – the financial product enjoyed substantial trading volumes. The Bank of Canada (BoC) has been at the forefront of a central bank working group to explore a blockchain future.
These are just some of the statistics to prove one point: Cryptocurrency is massive in Canada – and its growth is now slowing down anytime soon.
As cryptocurrency evolves and matures – and governments worldwide adapt to the current landscape –industry observers argue that Canada could be a hub and magnet for all things crypto. Whether it is the prevalence of fintech firms or businesses turning to protocols and digital tokens, the Canadian economy could experience tremendous gains with virtual tokens.
Market experts contend that perhaps one of the few things holding down growth might be regulatory uncertainty. While public policymakers in Canada have not presented cases to make crypto illegal, there are many questions to be asked.
Perhaps the most fundamental question is this: Is cryptocurrency legal in Canada?
Yes, cryptocurrency is legal in Canada.
In fact, many of the moving parts associated with the crypto sector are legal in Canada. From crypto exchanges to crypto trading, everything can be accessed without fear of breaking the law.
That said, just because buying, selling, and trading crypto is legal in Canada, crypto is not considered legal tender.
Yes, a nation like El Salvador has identified Bitcoin as a legal tender. But Ottawa does not. Sure, Canada might one day adopt a central bank digital currency (CBDC) - that’s a story for another day! - but Bitcoin, Ethereum, or Tether will not and cannot replace the loonie.
Of course, this does not mean it is unregulated. Cryptocurrencies in Canada are under the purview of securities legislation, which means that it is an asset that falls under an investment category.
Meanwhile, in March 2021, the Ontario Securities Commission (OSC) announced that it had reached out to crypto asset trading platforms that offer their services to individuals or companies located in the province. The purpose is to ensure these businesses are in compliance with provincial securities law or risk facing possible regulatory action.
This was in response to the growing number of entities that sold crypto assets to Ontario residents.
“Unregistered crypto asset trading platforms expose Ontario investors to significant risks, including potential loss, theft and misuse of their assets. The recent explosion of unregistered platforms has magnified these risks,” said Grant Vingoe, Chair and CEO at the OSC, in a statement. “Regulatory oversight serves a critical role in investor protection, and we expect platforms to act swiftly to bring themselves into compliance with Ontario securities law.”
Now, the next component many crypto traders often inquire about is the issue of taxation.
The Canadian Revenue Agency (CRA) presently identifies cryptocurrency as similar to a commodity. Therefore, any income generated from cryptocurrency is considered either a capital gain/loss or a business income/loss.
But what would be considered a transaction by the CRA? Here is a brief list:
· Exchanging a digital currency for another virtual token.
· Buying or selling goods or services with cryptocurrency.
· Converting cryptocurrency to fiat money.
· Gifting cryptocurrency.
Crypto’s presence in Canada will only grow as the years go by.
It is a friendly market, especially considering that Canada issued the first crypto ETF before the U.S. Many tech experts from overseas want to live and work in Canada. When multiple parties, including the BoC, are turning ebullient over everything Bitcoin, Ethereum, Cardano, and Avalanche, it is clear that crypto will possess a critical role in the Canadian economy for years to come.