The Department of Finance yesterday launched a two-year review of the “risks to monetary sovereignty” from Bitcoin. It follows the February 14 Emergencies Act freeze of some $7.8 million held in 170 Bitcoin wallets and 267 bank accounts belonging to Freedom Convoy sympathizers..“The digitalization of money, assets and financial services which is transforming financial systems and challenging democratic institutions around the world creates a number of challenges that need to be addressed,” staff wrote in a notice to contractors..“In the last several months there have been a number of high profile examples, both around the world and here in Canada, where digital assets and cryptocurrencies have been used to avoid global sanctions, evade government oversight and fund illegal activities.”.According to Blacklock's Reporter, the notice did not cite the Freedom Convoy by name. Staff said consultants would be hired on “maintaining Canada’s sovereignty over Canada’s financial sector and economy” in the face of digital currency..“Digital assets are of particular concern, raising broader risks such as risks to monetary sovereignty and the ability to conduct monetary policy; competition risks if economic power becomes concentrated in issuers; environmental risks due to power consumption; and illicit finance risks including sanctions circumvention, money laundering, cybercrime and tax evasion,” said the notice Financial Sector Legislative Review On The Digitalization Of Money..“There is increasing concern that as the adoption of cryptocurrencies continues to grow, risks related to these assets become systemically important.”.A confidential report is due by 2024. No budget for the review was detailed. Cabinet in 2019 introduced first-ever regulations on Bitcoin dealers under the Proceeds Of Crime And Terrorist Financing Act that required disclosure of large cash transactions..Then-Finance Minister Bill Morneau in 2018 testimony at the Senate banking committee said Bitcoin could not remain unregulated. “As far as Canadians are concerned, I am convinced it is something difficult to understand,” said Morneau..“Is it fair to say that you do not see this as a legitimate form of currency?” asked Senator Pamela Wallin (Sask.). “Absolutely,” replied Morneau..“We’re obviously putting regulations in place to require dealers to have reporting responsibilities so we get a handle on them,” said Morneau. “Increasingly crypto assets are being used to launder the proceeds of crime.”.The finance department in a 2013 Access To Information report said it considered Bitcoin a magnet for illegal trading. “Bitcoin’s anonymity could be attractive to money launderers and terrorist financiers,” said the report Risk Assessment: Bitcoin Exchanges.."This government relies on its ability to print in order to pay for its massive overspending habit. The result of all this printing as we've recently seen is inflation," said David Bradley, of Edmonton-based Bitcoin Well.."They are taxing us by siphoning away our purchasing power. Since bitcoin has no central authority and cannot be printed, it is definitely a threat to the government's ability to tax us through inflation."
