Canadian senate committee urges 'light touch' Bitcoin regulation

Canadian senate committee urges 'light touch' Bitcoin regulation

Canada should employ a "light regulatory touch" when dealing with digital currencies and the blockchain, according to a report from a powerful standing senate committee.

After a 14 month investigation, the Standing Senate Committee on Banking, Trade and Commerce has published a report that notes the risks associated with Bitcoin and other digital currencies, but is also positive about the potential impact of the blockchain.

To combat tax evasion, money laundering and terrorist financing, the report recommends that digital currency exchanges should be made to meet the same requirements as other money services businesses in relation to Canada’s AML and anti-terrorist financing regimes.

However, the committee warns that in general "this technology requires a light regulatory touch - almost a hands off approach. In other words, not necessarily regulation, but regulation as necessary".

This is because blockchain technology is at a "delicate stage" of its development and over-regulation could throttle its "vast potential" to help bring financial services to the unbanked, and make transactions cheaper and more secure.

In fact, the federal government should consider the use of blockchain technology to deliver its own services and to enhance the security of private information.

Noting hacks on government databases, the report says: "In our view, compared to centralized databases, blockchain technology may provide a more secure way to manage information, as it does not rely on security software developed by third parties."

Concludes committee chair Irving Gerstein: "These new technologies may have innovative and as-yet unimagined applications and are at a delicate stage in their development and use. We must tread carefully when contemplating regulations that might restrict and stifle their potential."

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