Business in the financial sector is thriving. Every day, millions of billions of dollars change hands in this market. However, did you know that every year, over 45% of financial intermediaries, such as payment networks, stock exchanges, and different money transfer services, are attacked by cybercrime?

Yes. That’s right. As a result, transactions need to be safe, open, and affordable. Hence, companies are now looking to implement blockchain technology – a virtual ledger that can record and verify many digital transactions.

Blockchain is only entering e-commerce. Despite technology, it may not revolutionize e-commerce, but it may promote it and change business paradigms. If efforts succeed and technological and legal obstacles resolve, Blockchain might become the service sector’s “infrastructure.”

Along with smart contracts, it might automate services as robots did manufacturing. However, a major sectoral reorganization is improbable. Blockchain startup financing rose 713% to $25.2B in 2021, according to CBInsights.Furthermore, the WTO analysis predicts that Blockchain will reduce costs in Canada.

Intriguing, isn’t it? This blog will discuss blockchain’s inherent capabilities in boosting the Canadian financial sector. Continue reading!

What Makes Canada Ideal for Blockchain & Cryptocurrency?

Blockchain and cryptocurrency in Canada have traditionally thrived because of cheap electricity, fast internet, and friendly legislation. Since mining uses a significant quantity of power, making it a timely and expensive operation, cheap energy costs in Canada provide a suitable blockchain environment.

Due to its many distinctive characteristics that are unmatched everywhere else, Quebec is regarded as the Canadian mining capital. These include excess local energy, low-cost power, and fast internet.

How Is Canada Regulating Blockchain Technology to Boost the Financial Sector?

To enhance financial services, Canada is regulating blockchain technology. The government wants fair, transparent, and secure technology usage. A government working committee is investigating how to control blockchain technology. The working group includes government, business, and academic members.

The working committee is considering many blockchain regulation possibilities. It would need new blockchain technology and corporate regulations. Adapting legislation to blockchain technology is another approach. It may require adapting financial legislation to blockchain’s unique traits.

The working committee is still debating how to govern blockchain technology. The panel will report its findings and recommendations later this year. The government is still promoting blockchain technology in finance. A JMIR study found that patients’ opinions of exchange methods varied in privacy concerns, confidence in competence and honesty, opt-in intention, and readiness to give information. Participants embrace blockchain-based trading methods for privacy, coordination, and information sharing.

The following qualities of the blockchain sector contribute to the Canadian finance sectors:

1. Immutability

Blockchains record transactions chronologically. Because everyone has a copy, it’s almost impossible to edit or remove transactions or add unconfirmed data. To be effective, a concerted assault on hundreds – or possibly hundreds of thousands – of computers would be required, which is doubtful. These qualities assist the banking and finance sectors.

2. Eliminated Insufficient Funds

Consumers sometimes pay for products or services with a bad check, resulting in losses, extra penalties for merchants, and the prospect of legal trouble to recover. Blockchain-based payments may assure businesses that the transaction will complete within a few seconds or minutes.

3. Specifics of the Transaction

A distributed ledger is almost hard to modify, making ownership easy to trace. Transfers of ownership and liens may use the log to validate the information, increasing confidence. Money transfers are one of many ways blockchain has changed the banking industry, ensuring accurate, secure data.

4. Fraud Reduction

Blockchain records information in a ledger, with each block including transaction information and a unique hash that references the preceding block. Every individual on the network also gets a copy of the transactions. Blockchain technology is immune to distributed denial-of-service attacks, hackers, and other forms of fraud because of these characteristics.

Status of Cryptocurrency in Canada

All digital currencies—including cryptocurrencies—are legal in Canada. The 1990 Canadian Income Tax Act taxes cryptocurrency transactions. However, cryptocurrencies are not legal tender.

Cryptocurrencies are barterable goods, according to the Canadian Revenue Agency. In March 2021, the Canadian Securities Administrators (CSA) announced cryptocurrency guidelines.

Crypto investors rejoice that the directives do not recommend banning cryptocurrencies. This and other upcoming letters do not indicate that cryptocurrencies in Canada will grant “legal tender” status. Still, they are taking a huge step toward allowing crypto platforms to register as investment dealers or markets, depending on their roles and transaction volume. This will, in turn, change the dynamics of the finance sector.

The Bank of Canada is also studying the effects of major bank-regulated digital currencies (CBDC). The bank believes “stablecoins” are better for mass acceptance and a financial revolution than traditional cryptocurrencies. Finally, the Income Tax Act audits cryptocurrency transactions in Canada. Thus, utilizing cryptocurrency in Canada does not relieve you from tax duties.

Canada has sought to regulate cryptocurrency platforms under clear legal categories, attempting to monitor better and control bitcoin transactions as they become essential to current company operations. These national securities regulators anticipate taking good moves toward comprehending crypto and granting it legal status. Canada will likely remain a leader in crypto legislation. The nation also leads in adopting stable coins as money. The government will probably refine its ruling in this way.

Bottom Line

Finance is one of the world’s oldest and most significant sectors. It’s no surprise that blockchain technology is boosting Canada’s financial sector since it removes the need for third-party intermediaries, lowers costs, and expedites transactions.

We hope that after this article, you are aware of the potential impacts of blockchain technology on the finance sector and how the Canadian government is seeking to regulate it. However, if you still have queries, you should connect with a knowledgeable firm such as GJM & Co.

Our finance experts have an in-depth understanding of the sector across different geographies. They can help you understand the nitty-gritty of blockchain technologies, their impact, and the possible future. Should you have any queries or need consultation, Schedule a Call today or write to us at info@gjmco.in.