Canadian digital strategy echoes budget on Bitcoin

Canada's Conservative government has put out its long-awaited digital strategy, and it contains one sentence relevant to Bitcoin. In its "Protecting Canadians" section, the Digital Canada 150 plan, released today (April 4), states:

We will introduce new anti-money laundering and anti-terrorist financing regulations for virtual currencies.

That's essentially what the federal government previously said in its 2014 budget, tabled on February 11. Indeed, the government is already moving on this with its budget implementation legislation.

Bill C-31, introduced on March 28, expands the legal definition of a "money services business" to included virtual currency dealers. This would require Bitcoin exchanges and other cryptocurrency dealers to register with the Financial Transactions and Reports Analysis Centre of Canada, the country's financial intelligence agency.

According to the FINTRAC website, money services businesses must report to the unit any transactions that are "suspicious" or larger than $10,000, identify clients exchanging $3,000 or more in currency or sending money transfers of $1,000 or more, and appoint a compliance officer.

In November 2013, the Canada Revenue Agency said in a fact sheet that using digital currencies to pay for goods and services is considered a barter transaction for tax purposes. However, when buying and selling Bitcoin like a commodity, gains and losses are to be treated as income or capital.