Toronto May Soon Drive Virtual Currency Laws Across Canada


Toronto May Soon Drive Virtual Currency Laws Across Canada

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Chetan Phull · Jan 16, 2018 (addendum Jul 20, 2018)


The City of Toronto may soon be driving virtual currency laws for all of Canada.

Here's how.

Councillor Norm Kelly is proposing that Toronto property taxes, parking tickets, water bills, and land transfer taxes be payable by cryptocurrency (also known as "virtual currency" or "digital currency").* His proposal will be delivered in Council Chambers on January 31, 2018.

If ultimately passed, the proposal will represent the first steps in Canada toward ongoing government transactions with cryptocurrency. It would also likely result in a wholesale efficiency upgrade to the infrastructure of the public payments system.

The primary hurdle is with respect to jurisdiction.

For the City of Toronto to push ahead with this proposal, it will need to work with higher levels of government that have exclusive jurisdiction in respect of currency, banking, bills of exchange, municipal institutions, and other related areas.**

Consider, for example, that Parliament would likely need to amend the Currency Act, s.12, which is federally binding legislation that requires all public accounts to be maintained in CAD.

Moreover, payments by cryptocurrency would engage upcoming federal anti-money laundering laws which are not yet in force. The first municipally administered crypto-payments system would, we believe, need to occur in concert with the federal Governor in Council exercising his/her power to:

  1. add persons and businesses "dealing in virtual currencies" to the definition of "money services business"; and

  2. regulate in respect of the phrase, "dealing in virtual currencies".

Councillor Kelly's proposal, if accepted, is therefore expected to coincide with rapid legal development in the virtual currency space, plausibly with Toronto being the incentivizing force for Parliament and the Ontario Legislature to push ahead.

And what would those new virtual currency laws look like?

We suspect that Canada's virtual currency laws will be heavily influenced by the virtual currency rules in New York State (2015), and the related model code proposed for adoption in all U.S. states (2017).

For a general update on virtual currency laws in Canada and the U.S., see our previous blog post, "Your Blockchain Business Needs a Blockchain Lawyer".

For further analysis tailored to your business, see our AML service offering.

* Sources:

** Consider:

Addendum – July 20, 2018

On March 19, 2018, an Executive Committee for the City of Toronto recommended the preparation of a report, regarding:

  • cryptocurrency to pay municipal bills;

  • efficiencies that blockchain technology could bring to Toronto; and

  • security issues arising from cryptocurrency and blockchain technology.

Toronto City Council strongly denied the motion to prepare such a report, on March 26, 2018. (See EX32.21 resolution and Toronto Municipal Code, §27-1, 27-76.)

Councillor Kelly effectively abstained with an early departure, presumably in protest.

During the debate period, Bitcoin was harshly criticized by all speaking members as a payment means for municipal bills. Among the concerns raised were volatility, and the risk of money laundering and terrorist financing.

Although Council was open to the idea of later implementing blockchain technology for municipal processes, there was strong reluctance to assume a global leadership role in blockchain research and implementation.

The general consensus during debate was that the private sector, educational sector, and other governments were better suited leaders in this space, because they were already engaged in researching the technology and policy implementations.

The full Council debate can be viewed here (30 mins long starting at 46:30):


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