To start the consultation, the Canadian government cited its worries about the potential threats that digital assets and the digitization of money may bring to its financial system. According to its new mini-budget, the Canadian federal government will soon begin a consultation on cryptocurrencies, stablecoins, and Central Bank Digital Currencies (CBDCs).
What's the government planning?
In addition to its annual budget, the government's "2022 Fall Economic Statement," (1) presented on November 3 by Deputy Prime Minister Chrystia Freeland, serves as a financial update. The government's plans for cryptocurrencies were described in a brief portion of the announcement titled "Addressing the Digitalization of Money."
The country's financial system legislation "needs to keep pace" with the way cryptocurrencies and money digitization are "transforming financial systems in Canada and throughout the world," according to the report. According to the statement, the digitization of money "poses a risk to democratic institutions across the world," underlining the use of cryptocurrencies for both domestic and international sanctions evasion and the funding of illegal activity.
What's the stance on Crypto?
The government stated that stakeholder discussions on digital currencies, stablecoins, and CBDCs would begin on November 3; however, it is still unclear which stakeholders would be included. The government's intention to launch a "financial sector legislative review focused on the digitalization of money and maintaining financial sector stability and security," which was a part of the 2022 budget released on April 7, is understood to be the context for the consultations that have been announced.
What measures are being taken?
In light of these dangers, this evaluation will look at the "possible necessity" for a Canadian CBDC. Canada's COVID-19 vaccination mandate and limits sparked demonstrations in January, with participants turning to cryptocurrency fundraising platforms after being barred from rival fiat fundraising platforms. Due to the demonstrators' blockades of its roads, the province of Ontario proclaimed a state of emergency on February 11, as a result of which its government froze millions in donations to the protestors; at the time, the protestors had amassed about 21 Bitcoin.
Invoking the Emergencies Act (2) on February 14 gave Prime Minister Justin Trudeau the authority to freeze protestors' bank accounts and keep an eye on "large and suspicious transactions," including cryptocurrency. Two days later, the federal police of Canada demanded in writing to several cryptocurrency exchanges that they cease processing transactions involving more than 30 unique crypto wallet addresses connected to the current protests.