- POSTED: 13 Feb 2014 02:48
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Canada will bring in new anti-money laundering and anti-terrorist financing laws aimed at preventing abuses of virtual currencies such as Bitcoin, the finance minister confirmed Wednesday.
OTTAWA: Canada will bring in new anti-money laundering and anti-terrorist financing laws aimed at preventing abuses of virtual currencies such as Bitcoin, the finance minister confirmed Wednesday.
Asked about Bitcoin, a so-called "cryptocurrency" that is gaining in popularity both as an investment and as a way to make online payments, Jim Flaherty said: "We're going to have a look at it."
The Canadian government had announced its plan to tighten rules around the use of virtual currencies in the federal budget a day earlier, but no details were provided.
The budget document said Canada would "address emerging risks, including virtual currencies, such as Bitcoin, that threaten Canada's international leadership in the fight against money laundering and terrorist financing."
The proposed legislation follows recommendations in a March 2013 report by a senate banking committee.
Unlike other currencies, Bitcoin does not have the backing of a central bank or government.
Instead, units are generated by a complex computer algorithm designed by one or more anonymous people in 2009.
A report last month by the International Institute of Finance (IIF), which represents more than 450 banks and financial institutions, said Bitcoin's future as a broadly accepted exchange medium is limited.
It concluded that more regulation of Bitcoin exchanges and transactions could strengthen its legitimacy among consumers and ease regulators' doubts.
But for the moment, the IIF report said, Bitcoin faces significant resistance.
China and Russia recently cracked down on the use of Bitcoin.
In the United States, New York state signalled plans to become the first jurisdiction to regulate businesses that handle virtual currencies.
Bitcoin's value meanwhile plunged this week after attacks on major exchanges, forcing three to suspend withdrawals.
A technical glitch apparently allowed fraudsters to flood exchanges with duplicate withdrawal requests, allowing them to convert the same Bitcoins twice into traditional currencies.