Hello everyone,
The Bitcoin Embassy, Bitcoin Foundation Canada and Bitcoin Alliance were recently questioned by the Senate of Canada's Banking, Trade and Commerce committee in the context of the "Study on the use of digital currency".
Highlights and analysis can be found here (the blog post is full of hyperlinks which refer to specific parts of the interrogation:
http://btcfoundation.ca/?p=1843Photo of us: FROM LEFT TO RIGHT: Michael Perklin (Bitcoin Alliance of Canada), Francis Pouliot (Bitcoin Embassy/Bitcoin Foundation Canada), Jillian Friedman (Bitcoin Foundation Canada), Guillaume Babin-Tremblay (Bitcoin Foundation Canada), Stuart Hoegner (Bitcoin Alliance of Canada).
https://i.imgur.com/auk9afc.jpgBlog post (without hyperlinks)
In Canada, the public debate surrounding Bitcoin and cryptocurrencies is currently being formalized as the official “Study on the use of digital currency”, a consultative exercise conducted at the initiative of the Senate of Canada’s Banking, Trade and Commerce committee.
Although the Senate of Canada exerts less authority than the House of Commons, its standing committees have proven to be an influential source of expertise and opinion. It also enjoys considerable international attention: according to Stuart Hoegner, general counsel at the Bitcoin Alliance, “no other parliamentary body in the world has publicly canvassed the breadth of materials and opinion that this committee has”.
On October 2nd took place perhaps the Committee’s most important session where Bitcoin experts and advocates representing non-profit organizations gave their much awaited testimonies regarding the regulation of cryptocurrencies.
Until then, witnesses consisted primarily of government agencies and departments, financial institutions, economist and other “non-industry” experts as well as some Bitcoin businesses such as BitPay and CAVirtex.
Canada’s Bitcoin community was represented by:
– The Bitcoin Embassy (Francis Pouliot)
– The Bitcoin Foundation Canada (Jillian Friedman and Guillaume Babin-Trenblay)
– The Bitcoin Alliance of Canada (Michael Perklin and Stuart Hoegner)
In the following article, hyperlinks point to specific parts of the session which are being referred to. You can also watch the entire session (2 hours):
– English
– French
– Raw footage (no translations)
“Are you looking for regulations, or are you not looking for regulations?”
– Senator GersteinThat was the very first question addressed that day by Senator Irving Gerstein, chair of the meeting, who was pointing out that the Bitcoin businesses that had previously testified “were all basically requesting regulation”. The question was directed at the Bitcoin Embassy who, in its statement, had stated that “it is perhaps unwarranted to artificially decrease these risks (associated to Bitcoin) by regulation when innovation continues to make bitcoin safer”.
The answer is not as simple as yes or no. As pointed out by Jillian Friedman, “to a very large extent, bitcoin already is regulated. It is subject to the principles of law; it does not exist in a legal vacuum”. For instance, regarding consumer protection, Ms. Friedman believes that “the question is not so much whether consumers need to be protected, but whether they need more protection than they already have”.
In places where regulatory uncertainty remains, according to M. Babin-Tremblay, “it’s not regulation per se that is required; it is more clarification about where Bitcoin falls”. In any case, according to Stuart Hoegner, government oversight should be focused at the “choke points” involving Bitcoin, meaning “where bitcoin goes from fiat to bitcoin or vice-versa”.
“How do we assist this disruptive technology?” – Senator BlackPerhaps the most significant exchange occurred when it was Senator Doug Black’s turn to address the panel of Bitcoin advocates. It is worth to transcribe his entire question here:
“Speaking for myself, I view my role on this file as to assist, in a meaningful way, innovation, as you have discussed today. That’s how I’m trying to look at this. How do we assist this innovative technology, this disruptive technology, as you referred to? (…) What would you like this committee to do to assist the development of this, right to the point? What would you like us to do? Maybe the answer is nothing, and if that’s the answer, tell us. But if there is something that you need to do to enhance Canada’s position as a destination for innovation, I want to know that. Let’s cut right to the chase: Tell us what you need from us.”
Why are Canadian banks declining to open accounts for Bitcoin businesses?Another major issue discussed during the session was the difficulty for a Bitcoin entrepreneur to open a bank account. According to Mr. Babin-Tremblay, “as a bitcoin entrepreneur, one of the issues I have faced several times relates to opening a bank account”. However, as stated by M. Pouliot, “it’s not clear why it’s so difficult, why banks are so fearful. It might be regulatory uncertainty or internal policies or miscommunications”.
There is a lot of speculation regarding why Canada’s banks seem “weary” of Bitcoin businesses. Here’s the main takeaway from the panel concerning banks:
1) Banks are within their right to accept or refuse Bitcoin businesses as clients. As pointed out by Ms. Friedman, “banks are not beholden to anyone with respect to who they decide to open accounts”. Indeed, as stated by M. Hoegner, “whether they have regulatory certainty in this country or not, they are free to accept or decline as customers whomever they wish.
2) There mere fact that a business can be associated to Bitcoin in any has been used by some banks as justification for refusing that business a bank account. Perklin’s example is particularly potent:
“When I was trying to open up a bank account, I was specifically trying to open a Canadian bank account. When I was filling out the forms and the bank officer saw the name of my company, before I was even finished the form, he stopped me and said, “Sorry, sir. You can’t open up a bank account here.” They told me they had received an e-mail from head office — it was apparently a blast e-mail that all bank employees received — that said do not open any bank accounts for bitcoin companies. Any company that accepts, remits, transmits or converts bitcoins refused to open up any bank account.”
3) Once the expected regulations regarding anti-money laundering come into full effect, it will be very clear to banks what the requirements of businesses dealing in digital currency are. At that point, regulatory uncertainty will not be a valid justification and we may obtain more information on the real reasons behind the banking sector’s reluctance to engage with Bitcoin businesses.
Other notable session highlights (links to parts of the video)Opening statements
– Opening statement of the Bitcoin Embassy by Francis Pouliot
– Opening statement of the Bitcoin Alliance of Canada by Stuart Hoegner
– Opening statement of the Bitcoin Alliance of Canada by Michael Perklin
– Opening statement of the Bitcoin Foundation Canada by Jillian Friedman
– Opening statement of the Bitcoin Foundation Canada by Guillaume Babin-Tremblay
Questions and panel answers
– The Chair (senator Gerstein) asks if panelists want, or don’t want, regulations
– Senator Tkachuk asks if Bitcoin can survive without regulation
– Senator Massicotte asks if Bitcoin is confidential and therefore can lead to money laundering
– Senator Bellemare says: “I really sense that Bitcoin and all of these currencies are there to stay – there is a paradigm shift happening”
– Senator Bellemare asks about Bitcoin’s risks and how they can be mitigated
– Senator Ringuette asks why we need bank accounts if Bitcoin is independent from the traditional banking system
– Senator Ringuette suggest that Canada Post could get in the business of providing Bitcoin services
– Senator Tkachuk asks about the expansion of Bitcoin’s money supply
– Senator Massicotte asks about the convenience and usefulness of confirmation times
– Senator Bellemare asks about the quantitave theory of money (MV=PQ) and how it relates to Bitcoin’s money supply
– Senator Bellemare asks why Bitcoin is so popular in China
– Senator Ringuette asks if the Senate should recommend to the receiver general of Canada that they accept tax payments in Bitcoin
– Senator Tannas asks if the Bitcoin community has considered forming a credit union to bypass the need for major banks
For more information, please contact me at
francis.pouliot@ca.bitcoinfoundation.org
