Governments around the world are grappling with what to do with Bitcoin — the cryptocurrency that has attracted enthusiasts worldwide, endured the bankruptcy of one major exchange (Tokyo-based Mt. Gox), and puzzled fans and detractors alike with regard to its legal status. The Montreal Economic Institute recently published a study that discusses Bitcoin’s potential. In a study titled “How Should Bitcoin Be Regulated?” the Montreal Economic Institute asserts, “In order for [Bitcoin] to develop its potential and be adopted by a growing number of users, clear rules are required, along with some kind of governmental acceptance.” But the rules that are established ought not create burdens that prevent its use in a manner similar to money (as would occur if each user transaction were to trigger a capital gain/loss).
In proposing a model for Canada to follow, MEI study author David Descôteaux points to Germany: “These clear rules, as well as a tax treatment that allows Bitcoin to be used as a currency, explain why the digital currency is popular in Germany and why this country was one of the first Bitcoin hubs. Canada has so far been quite welcoming to Bitcoin, and in clarifying its own regulatory framework, it should ensure that it remains so.”