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Cryptocurrency has gained more stance over time in the world of finance, with many investors and individuals tunneling their routes to the heart of it. Well, one could say thanks to blockchain capabilities that have found more real-world use cases beyond trading Bitcoin, Ethereum, XRP, etc. With the current evolution of some diversity in the cryptosphere, such as NFTs, Metaverse, Machinery, etc., more individuals, companies and investors are trooping in with good prospects for the whole cryptocurrency community. But how well has the turn-up been in Canada?
THE UPRISE OF CRYPTOCURRENCY IN CANADA
Bitcoin was the first cryptocurrency, founded in 2009 by Satoshi Nakamoto under the alias Satoshi Nakamoto, and based on the concept of “decentralization,” a digitally-driven method. Since the cryptocurrency market has grown to be a massive market with over $2billion of the world’s money invested so far, many people now buy Litecoin, Dogecoin, and other cryptocurrencies to invest in cryptocurrency and benefit from. The evidence of crypto acceptance on various business platforms as payment instead of traditional fiats is strewn over this widely used coin; Travaland is an excellent example.
The popularity of cryptocurrencies among Canadians is statistically caught in the middle of this performance. In Canada’s history, cryptocurrency has progressed almost as far as the first launch of Bitcoin in 2009, with the country becoming the first to enact cryptocurrency legislation in 2014. Many studies have been conducted to determine the amount of interest in cryptocurrencies in Canada. According to research conducted by Hardbacon, a financial tech start-up, among Canadian adults to estimate sentiments for cryptocurrency among Canadians, the results show that over 28% of those polled own digital assets, 85% of those polled have been exposed to Bitcoins, and nearly 75% have some Ethereum in their wallets. It’s worth noting that the country’s passion for cryptocurrencies has recently risen, with Canada currently ranking second only to the United States as one of the countries with the most ATM machines, with around 1460 in total.
Bitcoin Well recently commissioned Ipsos research to statistically determine the amount of cryptocurrency involvement among Canadians aged 18 and up, with 13% of the population owning Bitcoin and the remaining 23% intending to buy one or more cryptocurrencies in the future. According to Ipsos, the Canadian crypto business has risen steadily over the years, from 3% Bitcoin ownership in 2016 to 14% cryptocurrency ownership in 2021.
CRYPTO REGULATIONS IN CANADA
The adoption of Bitcoin as a legal tender in El-Salvador was faster than expected, but it is nonetheless good news in the cryptosphere. In the race to have cryptocurrencies accepted as legal cash in as many nations as possible, Bitcoin is yet to be accepted as legal tender in Canada. Only banknotes issued by the Bank of Canada and coins produced by the Bank of Canada are considered legal tender, according to Section 8 of Canada’s Currency Act. Crypto regulatory standards in Canada are complicated, to say the least. The crypto regulations in Canada have fluctuated between ups and downs, owing to the fact that it is governed differently in each province. Each province establishes its own regulatory bodies for financial properties and structures, securities, and other matters. Each crypto enthusiast or company may need to be aware of regulatory rules specific to their province of residence.
In 2013, the Canada Revenue Agency determined that Bitcoin can be classified as a commodity similar to gold, and that tax laws for barter transactions should be applied to Bitcoin. Furthermore, according to a position paper published by the Bank of Canada in 2014, Bitcoin and other cryptocurrencies do not fit the criteria of money in Canada. This explains that a Bitcoin transaction profit or loss will be considered as either business or property revenue or capital return or loss. The distinction has significant tax ramifications. Only ½ of a return of capital is taxable, whereas the entire amount of company or property income is. On the other hand, while only half of the capital losses are taxable, losses related to business or investment activities are totally taxable.
The principles for barter transactions come into play when digital currency is being used to pay for products or services. Trading, investment, and wagering are examples of Bitcoin transactions that may blur the distinction between dividends and capital gains. Indeed, the ambiguity between investing, which results in a capital gain or loss, and trading, which brings about business revenue or expenses, has been the subject of a vast body of case law in Canada.
CONCLUSION
As Bitcoin continues to gain traction as a viable alternative to traditional currencies, the future may arrive sooner than predicted. But, with more centralized regulatory organizations involved, will the emerging “decentralized world of finance” espoused by Satoshi Nakamoto through the advent of blockchain still stay as proclaimed? Yet to be answered.