bitcoin
Bitcoin (BITCOIN)
$96,528 -1.04%
ethereum
Ethereum (ETHEREUM)
$2,668 -0.49%
binancecoin
BNB (BINANCECOIN)
$673.34 -3.58%
solana
Solana (SOLANA)
$195.00 -0.46%
ripple
XRP (RIPPLE)
$2.50 1.77%
shiba-inu
Shiba Inu (SHIBA-INU)
$0.000016 -2.74%
pepe
Pepe (PEPE)
$0.000010 -0.99%
bonk
Bonk (BONK)
$0.000018 -2.31%
bitcoin
Bitcoin (BITCOIN)
$96,528 -1.04%
ethereum
Ethereum (ETHEREUM)
$2,668 -0.49%
binancecoin
BNB (BINANCECOIN)
$673.34 -3.58%
solana
Solana (SOLANA)
$195.00 -0.46%
ripple
XRP (RIPPLE)
$2.50 1.77%
shiba-inu
Shiba Inu (SHIBA-INU)
$0.000016 -2.74%
pepe
Pepe (PEPE)
$0.000010 -0.99%
bonk
Bonk (BONK)
$0.000018 -2.31%
bitcoin
Bitcoin (BITCOIN)
$96,528 -1.04%
ethereum
Ethereum (ETHEREUM)
$2,668 -0.49%
binancecoin
BNB (BINANCECOIN)
$673.34 -3.58%
solana
Solana (SOLANA)
$195.00 -0.46%
ripple
XRP (RIPPLE)
$2.50 1.77%
shiba-inu
Shiba Inu (SHIBA-INU)
$0.000016 -2.74%
pepe
Pepe (PEPE)
$0.000010 -0.99%
bonk
Bonk (BONK)
$0.000018 -2.31%
Disclosure
Cryptocurrency trading is speculative and your capital is at risk when you trade. We may earn affiliate commissions from some of the products on this page - at no extra cost to you.
Industry worries over crypto accessibility after Ottawa's overreach in budget 2024

Industry experts suggest that the 2024 federal budget might make it tougher for Canadians to invest in cryptocurrencies. They warn that it could also slow down growth and progress in the sector.

In the fine print of a budget supplement, there is a plan for discussion that has many concerned. They fear the government might take away tax benefits from cryptocurrency Exchange-Traded Funds (ETFs). Additionally, there’s worry that the Canadian government’s ongoing skepticism about cryptocurrencies will heavily influence the institution of new transaction reporting rules from the Organisation for Economic Co-operation and Development.

Advertisement

Banner

Canadian Web3 Council addresses crypto industry

As the executive director of the Canadian Web3 Council, which represents many fintech, crypto, and blockchain companies, Morva Rohani addressed the industry’s budget concerns. She conveyed their fear of a negative narrative that dubs cryptocurrency a threat to middle-class financial security.

Rohani believes this portrayal is somewhat exaggerated. However, she does note that the government’s exploration of various methods to restrict access to the cryptocurrency ecosystem and decrease incentives for investments in this realm is palpable.

One of the issues that I think our industry has with the budget is a prevailing negative narrative calling cryptocurrency a risk to the financial security of the middle class

Morva Rohani

During a discussion with Yahoo Finance Canada, Bitcoin Well’s CEO Adam O’Brien candidly expressed his concerns. He said the government is not dedicated to creating a conducive environment for consumers and businesses about Bitcoin.

Adam also warned about the potential for crypto-focused businesses to move their operations elsewhere. If the business environment continues to be unfriendly, these businesses may be prompted to relocate to more accommodating jurisdictions. He added that these moves are becoming increasingly easy for Bitcoin and other crypto-focused businesses.

Crypto investments in registered plans

The budget annex document reveals the government’s intent to seek submissions on several issues, including whether crypto-backed assets suffice as qualified investments for registered plans. There is a looming fear amongst industry players, such as Rohani, who argue that a resolution to exclude crypto-backed funds from qualifying as investment status could potentially dampen Canada’s competitiveness in the cryptosphere.

He points out that, with the approval of crypto ETFs in the U.S., there’s already a visible financial shift as numerous dollars shift from Canadian ETFs towards the U.S.

If the government stops cryptocurrency ETFs from being part of registered plans, this could significantly impact finances. It might take away a more straightforward and safer choice for folks who want to invest in cryptocurrencies and spread their investments. Also, this step could push some investors to move their money to areas with less strict rules.

In Canada, although relatively few funds are supported by cryptocurrencies like Bitcoin and Ethereum, which handle significant assets, the Purpose Bitcoin ETF by Purpose Investments is a notable exception. It offers several series and has collected over $2 billion in assets.

Crypto reporting standards under scrutiny

The national budget empowers the Canada Revenue Agency to supervise the crypto reporting standards that OECD countries, including Canada, agreed to in 2022. This agreement, known as the Crypto-Asset Reporting Framework, will be implemented by its 48 signatories by 2027.

According to Katrin Tinn, an assistant professor of finance at McGill University, CARF aims to prevent tax evasion and other illicit activities internationally through the use of cryptocurrencies and assets.

She spoke to Yahoo Finance Canada, explaining that CARF establishes the types of crypto assets and transactions that should be monitored, outlines the scope of data to be gathered, and provides guidelines on ascertaining tax jurisdiction for a transaction.

CW3’s Rohani expressed anxiety regarding the clarity of implementation domestically. Despite the prominence of crypto assets and associated ecosystems, it seems the current government does not recognize their importance.

She shared her impressions, noting the government’s lack of proactive engagement in establishing a regulatory framework for these digital assets. Despite launching a consultation on the digitization of money roughly two years ago, there has been little to no progress.

Since that consultation, the government has not provided clarity on either the timelines or the objectives. Rohani suggests that this lack of engagement is the current obstacle hindering innovation in the field.

O’Brien has experienced inconsistent messages from Canadian regulators over the years. He anticipates that Canada’s implementation of CARF will compromise the privacy of most law-abiding citizens.

He believes this is aimed at curbing tax evasion perpetrated by a small subset. Additionally, he predicts it will impose responsibilities on Canadian businesses based on what he refers to as antiquated currency systems.

Advertisement

Banner

Advertisement

Banner

Advertisement

Banner