We’ve been making a lot of noise about Bitcoin over the past few months, but there is at least one country that isn’t as excited (as we are here) when it comes to welcoming a new way to pay for things. Canada, America’s rather shy and reserved cousin, is refusing to recognise Bitcoin as legal tender.
This is word from a Canadian government official, who sent a statement to the Wall Street Journal outlining the country’s stance.
“Only Canadian bank notes and coins are recognized as legal tender in Canada,” the statement read. “Bitcoin digital ‘currency’ is not legal tender in Canada,” said the official.
That doesn’t mean that Canadians can’t use the currency to buy and sell goods, though, just that Canadian retailers and institutions can’t be forced to accept it. Of course, it also doesn’t mean that the Canadian government is ruling Bitcoin out completely.
“The Canadian government, along with regulators including the central bank and the Office of the Superintendent of Financial Institutions, will continue to monitor developments involving virtual currencies”, the official added.
A spokesperson for the Bank of Canada, Alexandre Deslongchamps, said that Bitcoin’s potential to disrupt the financial stability of the Canadian financial system would be a reason for the bank to look into it and other alternate forms of payment.
“Smaller, stand-alone payment systems for which there are many substitutes – like Bitcoin — should generally require much less intensive oversight and regulation because they pose much less risk to the Canadian financial system as a whole,” Mr. Deslongchamps said.
“Nevertheless, these payment systems should be designed and operated to meet the needs of Canadians which would include convenience and ease of use, price, reliability, safety, and effective redress mechanisms.”
Bitcoin has proven rather volatile in recent months, soaring from a value of $140 per Bitcoin in November 2013 to over a thousand dollars, and then settling back into the high hundreds. It is currently valued at just under $860 after cresting the thousand-dollar mark in early January. Due to this volatility, many financial institutions, like The Bank of France, warn that Bitcoin “represents a clear financial risk for those that hold it”.
While Canada hasn’t endorsed the currency, it has at least recognised it in some sort of official capacity and is keeping an open mind. China, on the other hand, has expressly forbidden official institutions to accept Bitcoin as payment, as part of tighter banking regulations that came into effect in December 2013. As a result several of the country’s biggest online retailers have announced they will no longer accept Bitcoins as payment.
But Bitcoin doesn’t need China – or any official recognition – to thrive, just like Facebook’s banning in that country didn’t stop it from daily active users reaching 25% year-on-year growth. Non-Chinese use of the currency is taking off, with big-name companies like mobile game-maker Zynga announcing recently that it would be accepting Bitcoin as payment.
Even the porn industry has adopted the crypto-currency, a move that increased revenues by 25% and saved millions in credit card transaction fees that no longer needed to be paid. Some media outlets even went so far as to ask whether buying porn would turn into Bitcoin’s “killer app”. With such a wide reach it could potentially drive mainstream Bitcoin adoption alongside more conventional businesses.
Even here in South Africa, there are retailers that accept Bitcoin as payment. Nicksocks.com is perhaps the best-known one, with t-shirt seller Rooi.co.za, computer-part vendor Landmarkpc.co.za and even a reseller of refurbished geysers getting in on the action.
As Canada adopts a cautious approach when it comes to Bitcoin, the currency’s adoption still spreads – and it’s quite likely that the Canadian government and its financial institutions will have to change their stance at some point in the future.
Featured Image Credit: Coindesk.com