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"Bitcoin & Blockchain: What do They Mean for Financial Services?"


OlivierA
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Very interesting article from a big law firm in Canada. French version will be posted in the French section.

 

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It has been suggested that the Government of Canada is likely to issue a Canadian Dollar digital currency in the future. The Royal Canadian Mint has already issued a version of this known as MintChip. The Bank of Canada announced, in a closed media session at the 2016 Payments Panorama conference, that they had been experimenting with “The Jasper Distributed Ledger Settlement Platform.” This project introduced the concept of a possible “CAD-COIN.” This has placed Canada in a unique position in comparison to other jurisdictions, as the government is actively exploring the applications of this technology.

 

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Overall, this technology has the potential to impact a multitude of legislative regimes which may need to change to cope with the new technology. At the forefront of this will be anti-money laundering, securities and tax legislation. However, as the area becomes more robust, it is likely to impact other general areas of law such as consumer protection and even basic principles of contract law.

http://www.fasken.com/en/publications/Detail.aspx?publication=5c6ed86c-64b4-43c6-919f-141a3b45fe75

 

Edited by OlivierA
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Man, I struggled to reply in the French section and here was an English version...

Same thought as there, the biggest hurdle is taxation I believe. Right now sales tax is used for daily transactions and capital gains for 'investments' (and you have to prove which is which). Meanwhile private credit and local trade dollars are exempt (as long as applicable taxes are applied at point of exchange for goods- ie, the tax is applied on the transaction value of goods vs crypto being viewed AS the goods). I understand the rational behind it from a consumer perspective, but if it is to be adopted for interbank settlement XRP would need to be exempt somehow.

By the way, the forced sale of MintChip has pushed the Mint back a few years in development and its a... touchy subject to say the least among some employees there.

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@Mercury you did well in French :)

I hired a fiscal lawyer to try to find an answer and his firm is struggling to make sure the right taxation is applied to: holding cryptos (investment), trading (with profit or loss), using it for payment (commerce), etc.

Like you say, "the biggest hurdle is taxation".

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14 minutes ago, OlivierA said:

@Mercury you did well in French :)

I hired a fiscal lawyer to try to find an answer and his firm is struggling to make sure the right taxation is applied to: holding cryptos (investment), trading (with profit or loss), using it for payment (commerce), etc.

Like you say, "the biggest hurdle is taxation".

You're far too kind sir!

Yeah, the simplest logic I could discern was intent of sale.

Of course I would love to simply say all crypto is tax exempt, but with the ever growing use cases and choice of cyptos out there this is not feasible. Nor do I think it feasible to have a all-or-nothing mentality. Our country loves the rules of assumption with exception (assume it is the same for everything/ everyone with clear exceptions), and I think this could be broadly applied to cypto as well. Assume a flat tax on crypto trades (ideally something outside HST calculations) with exceptions applied to institutions using approved use cases (ie. banks inter-settlement) and research purposes (essentially a non profit). It would seem to me that there is plenty of precedence (another Canadian favourite) that would cover this approach.

Of course us small fries would still be left out (with the exception of certainty) and the real winners would be those fiscal lawyers.

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