Canada: Legal Implications Of Accepting Bitcoin As Payment

The number of Canadian businesses accepting virtual currencies as a form of payment is growing. Bitcoin is emerging as the most popular of these new currencies – none of which are subject to a central authority. Governments, including Canada's federal government, are starting to take note, expressing opinions on the applicability of domestic laws and proposing new regulations. It is still early days for virtual currencies, however, and uncertainty remains. Before your business decides to accept Bitcoin as a form of payment, consider the practical and legal risks outlined below.

Complying with Anti-Money Laundering and Anti-Terrorist Financing Regulations

Compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act is a central concern for many businesses considering accepting Bitcoin as a form of payment, especially businesses that deal with large sums of money.

For the moment, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) does not permit virtual currency brokers to register as money services businesses, having decided that virtual currency brokers are not money services businesses under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. As a result of this position, it is uncertain how or if the reporting requirements FINTRAC imposes for traditional forms of currency will apply to Bitcoin. This is especially salient given the high profile illicit activity that has been associated with Bitcoin, in addition to the growing use of Bitcoin for large transactions (for example, in Vancouver, one real estate developer has begun to accept Bitcoin for deposits). For now, some businesses are regulating themselves, with at least one Canadian Bitcoin broker attempting to distance itself from illegal activity by processing only small transactions.

But things are changing. In the 2014 Budget of the Government of Canada, released on February 11, 2014 the significant financial sector policy initiatives announced include measures directed at Bitcoin. The Budget states that "it is important to continually improve Canada's regime to address emerging risks, including virtual currencies, such as Bitcoin, that threaten Canada's international leadership in the fight against money laundering and terrorist financing." Further, the federal government committed to introduce legislative amendments to strengthen Canada's anti-money laundering and anti-terrorist financing regime, with a goal of improving "Canada's compliance with international standards, while minimizing the compliance burden". Among other things, such regulations could allow the federal government to track any virtual currency transfers worth $10,000 or more, as it already does with traditional forms of currency.

Turning Bitcoin into Cash

One of the most frequently cited risks associated with accepting Bitcoin as a form of payment is its volatility; see, for example, its dramatic tumble in December 2013 and its most recent dip after Tokyo-based Bitcoin exchange Mt. Gox froze customer withdrawals on February 7, 2014. One solution is to use a virtual currency broker that offers guaranteed conversion rates – an attractive solution, as such rates are often available for a fee well below those associated with credit card transactions.

Reliance on a Bitcoin broker, however, can pose its own problems. In 2013, a number of Bitcoin brokers reported that their Canadian bank accounts had been shut down, with little to no explanation from the banks. This is likely a reflection of the legal uncertainty surrounding Bitcoin; it is possible that as the Canadian government's position on Bitcoin is clarified, Canadian banks will increasingly accommodate Bitcoin businesses.

Tax Treatment

In December 2013, the Canada Revenue Agency clarified that GST is collectible on Bitcoin sales. And, earlier in 2013, the Canada Revenue Agency clarified that the exchange of Bitcoins for goods and services should be reported as any other barter transaction. Since the Department of Finance has recently stated that Bitcoin is not recognized as legal tender in Canada, it is to be treated as any other commodity. When Bitcoin is used to purchase goods or services, the value of the thing received is considered to equal the value of the thing given up in exchange. These values must be translated into Canadian dollars and used to determine the Canadian tax liability of the parties. Furthermore, as a commodity, a Bitcoin investment can give rise to a capital gain or loss.

Consumer Confidence

Even if your business decides to accept Bitcoin, will there be enough customers using it? Consumer confidence in Bitcoin fluctuates as much as its value, as Bitcoin has been vulnerable to hacking, fraud and theft. Because Bitcoin is not backed by a central authority, consumers bear the risk of its use: while traditional payment systems offer protections against fraudulent transactions, Bitcoin offers no such recourse.  The lack of regulation around Bitcoin not only contributes to legal risks for businesses, but also contributes to a lack of consumer protection.

Despite the risks described above, Bitcoin's large user base, low processing fees and the impressive ease with which it can be transferred from one person to another are significant benefits of the virtual currency, and these benefits will contribute to its continuing relevancy. It will be interesting to watch the twists and turns of regulatory regimes as governments around the world struggle to come to grips with this emerging area.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.