With the news that bitcoins is slowly being accepted in other parts of the world, including Canada, a question arises: Is Bitcoin globally secure? Many governments around the world have made statements saying that virtual currencies like bitcoins cannot be legal in their countries because they are not recognized as legal currency. However, other countries, such as China, are taking a harder stance against virtual currencies. One prominent government official said that virtual currencies should be banned from China. This highlights two important questions.
Is Bitcoin legal or illegal? Is it a digital currency transactions system? How does the future of the Internet and theblockchain project fit into this equation? Let’s explore these topics…
Is bitcoins illegal in Canada? At the current time, the answer is yes. Several Canadian provinces have either restricted or are considering making it illegal to use electronic money or to conduct virtual exchanges. The Canadian government has also discussed the issue with the US government and is still investigating the legal implications of the system. There is some speculation that the Chinese government may be trying to keep their domestic exchange rates similar to the People’s Bank of China (PBOC). If this were the case, then Canadians would have access to PBOC-like exchange rates.
What are the regulatory frameworks in Canada? Currently, there are no plans to regulate or create laws related to bitcoins. However, there are some aspects of the digital currencies that are being explored by Canadian officials. Two of those areas are the Canadian Payments Association (PPA) and Canadian Revenue Agency (CRA).
The Payment Association was established to address issues related to money laundering and to help ensure that payment systems such as PayPal and WorldPay are safe for Canadian residents to use. According to its mandate, the Payment Association works to “better promote and safeguard the privacy of individuals who conduct electronic payments.” The organization does this through the provision of information about possible security threats, proposing solutions, and facilitating dialogue with companies and other organizations that face similar problems. In addition, the Payment Association modifies its pricing model to ensure that the service it provides to its members is competitive. It also participates in a number of industry associations and provides training to its members on electronic payments and other issues. The Payment Association has published a number of policy statements and case studies related to electronic payment security and has created an appeals process to Canadian court cases that involve its members.
Another area of consideration for both the Canadian government and the rest of the international community is the potential impact of bitcoins on the Canadian economy. There is some uncertainty regarding the impact of bitcoins because the Canadian government and the Financial Transactions & Analysis Centre of Canada (CTAC) have not issued formal statements or opinions on the issue. They have, however, concluded that there is a lack of awareness of the risks associated with bitcoins among Canadian consumers. There is also some concern that the lack of attention may cloud the judgment of the regulatory bodies that will be charged with overseeing the activity of virtual payment institutions such as PayPal Inc. and the Royal Bank of Canada (RBC) do allow for virtual money transfer. This lack of guidance from regulatory bodies could have a negative impact on the Canadian economy.
One thing that is clear is that the potential use of bitcoins by Chinese individuals and businesses remains a latent issue. The lack of clarity is preventing members of the Chinese government and other government officials from publicly supporting or publicly discouraging the use of bitcoins at financial institutions like Toronto-based Canadian Exchange. Similarly, the lack of public opinion concerning the use of digital currency by Canadian residents does not mean that there is no risk associated with accepting virtual payments from Chinese individuals or businesses. The risks and issues will only be known once the Chinese government takes a position on the matter.
Another area of current concern is the likelihood that the Chinese government will impose further restrictions on foreign currency exchange or will attempt to change the existing controls to prevent capital flows using foreign currencies. The ultimate outcome of any attempts by the Chinese central government or Financial Ministry to manipulate foreign exchange rates is unknown. If this were to occur, it would likely have a significant global impact on currency rates and foreign direct investment, especially in China and the United States. However, there is a low probability of these things happening given that there has been no significant communication between Beijing and the Chinese markets since the introduction of the Silk Road trade and the formation of the Chinese Virtual Exchange.
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