Canada is second most popular country for bitcoin investment

REUTERS/Jim Urquhart/Files

REUTERS/Jim Urquhart/Files

QMI Agency

, Last Updated: 11:31 AM ET

Canada is the second most popular destination for capital investment in bitcoin companies, a Montreal think-tank says.

Some $10.5 million of venture capital has been invested in bitcoin in Canada, putting us behind the U.S. and just ahead of China, the Montreal Economic Institute says.

Bitcoin, digital currency created in 2009, allows people to make transactions anonymously without going through a central bank.

But the currency's association with money laundering and its lack of government regulation puts its growth and development at risk in Canada, the think-tank warned.

"In order for it to develop its potential and be adopted by a growing number of users, clear rules are required, along with some kind of governmental acceptance," study author David Descoteaux said in a statement.

Descoteaux said Canada should create legislation to facilitate interaction between Canadian banks and bitcoin companies.

Banks are wary of offering services to bitcoin companies for fear of running afoul of money laundering laws, he said.

For example, Cointrader, which launched the first bitcoin ATM in Montreal, alleges the Bank of Montreal shut down its account and those of other businesses that trade in bitcoin.

These kinds of stories send companies — which may be on the forefront of currency innovation — elsewhere to set up shop, the think-tank said.

Germany, for example, has bitcoin legislation and tax policy.

"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," Descoteaux said.

"Canada has so far been quite welcoming to bitcoin, and in clarifying its own regulatory framework, it should ensure that it remains so."

 


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