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Canada announces new scrutiny of Bitcoin

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The world’s first Bitcoin ATM is located in Canada in part because the country has taken a hands-off approach to virtual currencies — until now, that is.

Finance minister Jim Flaherty yesterday listed Bitcoin among the “emerging risks” that could threaten Canada’s reputation as a global financial leader, and said the government will allocate more money to regulators to track the issue.

Flaherty made the announcement as part of an annual budget speech in which the government sets out its priorities for the year.

Jim Flaherty, finance minister
Jim Flaherty, finance minister
The report accompanying the speech mentions Bitcoin in a section on anti-money laundering:

“The Government of Canada is committed to a strong and comprehensive regime that is at the forefront of the global fight against money laundering and terrorist financing and that safeguards the integrity of Canada’s financial system and the safety and security of Canadians.

Canada’s regime remains strong and effective and is consistent with international standards. However, 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.”

Such language is a common from Canada’s Conservative government, which regularly tries to portray itself as tough on crime of all sorts, and does not necessarily mean the end of Bitcoin in Canada. Flaherty’s words do, however, suggest that financial regulators will revisit an earlier decision in which they declared they would not scrutinize transactions under $3,000.

The Bitcoin ATM, located in a downtown Vancouver coffee shop, permits people to buy or sell up to $3,000 of bitcoins in a day, and includes a biometric sensor to ensure the same person doesn’t come back twice in a day; however, when I went by the machine in late December, the biometric feature was disabled.