https://docs.google.com/document/d/1FcXVWxpcYGzRabTwezSo2rjHT-w0UG-lg08ChKuu44g/edit?pli=1

"Dear Honorable representatives, staff, policy makers and other concerned parties,

Thank you for taking the time to read and consider this letter. As a concerned Canadian citizen and Bitcoin volunteer, I am glad to have the opportunity to share my viewpoint in this consultation. I will begin with a general overview and statement, and then give my answers to specific questions asked by this consultation.

Bitcoin is unlike anything governments, nation-states or even humanity as a whole have encountered before. Its impact will be like that of the internet – broad and all-encompassing. Many have scoffed at it or written it off as some play-thing for criminals, and yet it has endured and grown significantly as a technology for some 14 years now. It has decades ahead, with much more potential, just like the internet did back in 1997. To say it’s still early for Bitcoin is understating the situation.

It is already an extremely robust, self-perpetuating system, and it grows stronger every day because it empowers regular people to save and transact in inflation and seizure resistant money. It's a beautiful combination of open source software combined with a peer to peer decentralized network. For more on this I recommend going through some of the articles at:

https://nakamotoinstitute.org/mempool/

The Canadian Federal Government would be wise to pay attention to what’s really happening with Bitcoin, and its implications. Examples of this can be found in El Salvador where they have adopted Bitcoin as legal tender, or the UAE who have welcomed Bitcoin Mining with open arms, tax free. Bitcoin is just starting to make a mark at the nation-state level, and it will have a larger impact as adoption grows. Canada can be part of this change and reap the reward, or be left behind by ignoring this opportunity.

As a Canadian, I’d like to see my country take advantage of these early days in Bitcoin by adopting friendly regulatory and taxation policies towards Bitcoin specifically. I believe it would be a waste and a mistake to over-regulate this emerging industry at this early juncture with bad policy rooted in unsound logic.

Several questions posed by this consultation imply that policymakers are angling for such bad policies based on misinformation or malformation – especially surrounding coinjoin privacy solutions and the assumption of “truth” involving blockchain data when used as evidence in a court of law.

I will now begin to address specific questions asked of this consultation that are of concern and try to offer my perspective on each.

4.6 – Digital Assets and Related Challenges

• Should the Criminal Code be amended to better enable the seizure and restraint of digital assets including cryptocurrency for evidentiary purposes or as offence-related property?

As far as I’m aware, cryptocurrency does not require any further special amendments for better seizure or restraint beyond those already outlined in the criminal code, which should be satisfactory. However, it should be acknowledged that access to cryptocurrency cannot be generated by a party who does not have access to the corresponding cryptocurrency private key(s). Loss of private keys happens often and is not unusual for even the experienced cryptocurrency user. It is also very difficult or even impossible for one to prove that they do not have access to a set of cryptocurrency keys that they have lost, forgotten or destroyed.

• Are other measures needed?

Not that I am aware of.

• Is there a need to amend the Canada Evidence Act to provide for the admissibility of blockchain data as evidence? Is blockchain data already covered by existing rules?

Blockchain data should already be covered under current rules and is for the most part universally public information. Additional provisions are not necessary. However, no court should assume such data is proof of anything related to the real world, other than approximate energy expended to produce the block in which that data sits in the history of blocks and the approximate time of the activity which produced the data. Who, where, why, how, and other details related to that data cannot be proved without corresponding real world voluntary consent by the publishing party. Therefore, “blockchain data” is not a one size fits all solution to anything as far as “proof beyond a reasonable doubt" is concerned. It can be used to assist in the prosecution of a case, but it should not be the sole and primary evidence upon which a conviction is based. To rely on blockchain data as the primary evidence in a criminal case would easily violate the reasonable doubt principle in multiple ways.

• Should the Canada Evidence Act be amended so that the authenticity of records created using blockchain technology may be presumed? In what circumstances could this be presumed? Are existing rules adequate for this purpose?

In what capacity would this assumption be made? What is specifically being assumed as valid or true? Devil is in the details here. No such rule should ever be amended into the Canada Evidence Act under any circumstances. I will repeat for emphasis. NO such rule, allowing for the presumption of authenticity when dealing with “blockchain technology”, records, data etc. should ever be presumed by a court of law and/or enshrined in law via the Canada Evidence Act. Those who lobby to have this done likely have a financial incentive for this to happen, and are fundamentally mistaken. ie. They want the government of Canada to buy their product “solution”.

The circumstances in which presumption of authenticity for records created using blockchain technology can be assumed are very narrow, and likely only involve the assumptions covered by open time stamps. For a court of law to assume this it would require the judge or the court clerk to be technical enough to run their own respective blockchain node. They would first need to securely set up their own full node by downloading the binaries, verifying the corresponding PGP keys, signatures and hashes of the installation file. Then they could install the node software on a clean and never before used computer, for this one purpose of running a node. After the node is fully synced to the most recent block height with this secure setup, the judge or clerk could then double check if records with their full node match records that are in evidence. When this is done, only a few things are confirmed in fact: that the data was confirmed by the network at an approximate time, that it was a valid transaction following network rules, and that a specific range of energy was used to solidify that data into the blockchain.

The truth of that data is not certified. The who of the data is not certified. The why of that data is not certified. The where of that data is not certified. All of these and other elements can be spoofed, faked, forged, mismatched, and/or framed. It is important for lawmakers to understand that very few things are confirmed as true with blockchain technology. Conflation on this topic happens often to oversell what “Blockchain Technology” can actually do or prove. Which is very little, but enough to perpetuate a self perpetuating decentralized currency system, such as Bitcoin.

For Blockchain data to be presumed as “truth” and to have this nonspecific, vague and open ended “truth” certified in law is a mistake beyond all reason and logic, likely born of misinformation.

• Can information be obtained from centralized exchanges through existing production order provisions? Should amendments be considered?

Centralized exchanges already are regulated by provincial authorities and register with FINTRAC and as MSB’s. These should be enough to allow for federal officials to subpoena information when they have just cause under current standards. Expanding these standards beyond their current scope is not necessary and harmful.

• What would be the benefits of the above reforms?

It’s interesting that this question is asked, when no reforms are specifically put forward by the above posed questions. Although reading between the lines there are a number of ideas implied by these questions that I cannot endorse or consent to. Please strongly consider not implementing what has been implied. These will only harm Canadians, and the judicial system if implemented. However, allowance for opentimestamps as proof of a document existing in a certain way at a certain time, is accurate and perhaps beneficial to recognize.

• What would be the drawbacks?

Draw-backs could include arrests made on faulty data, false charges, false incarcerations, false convictions, and eventual expungement of records. Overall, a huge disservice to justice in Canada could be one of many drawbacks to assuming the non-specific authenticity of blockchain data. There is currently a case before American courts that is an unfortunate example of this.

Furthermore, adding regulations or powers on top of the ones already in place is unnecessary and could lead to abuse or the over-collection of sensitive data on Canadians that could be eventually compromised by bad actors. This already happens far too often with other regulated financial service companies and even federal government offices. We can avoid such future harmful data leaks by reducing the amount of unnecessary data the federal government collects on Canadians.

4.10 – Criminal Jurisdiction

• Are reforms to jurisdiction elements of the laundering of proceeds of crime offence needed?

• Should the law be amended so that the issuance by judges of production orders in Canada - where such orders may apply to entities that operate in the digital realm both within and outside of Canada and over whom Canada may seek to exercise jurisdiction in the context of such orders even where these entities are known to be primarily headquartered outside of Canada - be explicitly set out in statute notwithstanding inherent limitations of such orders?

Reserved

Database of Politically Exposed Persons and Heads of International Organizations

• Should the government create and maintain a database of politically exposed persons (PEPs), heads of international organizations (HIOs), and their family members and close associates?

• Should the government charge an access fee to help offset costs of such a registry?

• Does this proposal raise any privacy considerations?

• Is there a need for such a database given the existing resources and other databases available?

Reserved

Virtual Currency, Digital Assets, and Technology-Enabled Finance

• What legislative and regulatory remedies could be used to address the risks posed by new FinTech products or services (e.g., Anonymity Enhancing Coins (AEC) / PrivacyCoins, crypto-mixers, DeFi)?

With respect, the technology is evolving so fast that it is likely any over-burdensome regulatory remedies will become obsolete as soon as they are enshrined in law. This includes KYC information collection requirements, which are quite frankly not applicable here. KYC is not required for cash transactions (and shouldn’t be required) because of the nature of cash, so too can the same principle be applied to Bitcoin transactions because of the nature of Bitcoin – cash-like, peer to peer, and more of a bearer instrument.

Regulations governing privacy features on Bitcoin are not enforceable, I don’t advise the government to implement regulations they cannot enforce. Moreover, there is a good argument that in this age of mass over-exposed personal online information, Canadian citizens should have a right to keep their transactions in Bitcoin and Canadian dollars private. Without discrimination for doing so. This is not an unusual request. Or a request. Canadians will and should keep their sensitive information private, even from the most benevolent of regulators. Regulators should not discourage Canadians from using privacy enhancing technologies to protect themselves from theft, extortion or any number of varied threats in this digital age. To seek privacy is not unusual behavior, but normal and rational considering the varied and ever evolving threats of the digital age.

• Should reporting entities be prohibited from transferring (and receiving) virtual currencies to (and from) crypto-mixers/crypto-tumblers that are not registered with FINTRAC?

No.

There are multiple reasons for why this should not be required. For one, it’s trivial to legally, technically and practically work around via several methods if it becomes a regulation. Secondly, it sets a terrible precedent that could allow for future mission creep regulations on personal use of coinjoin technology, which is a very useful privacy enhancing technology for regular Canadians. These tools help to protect Canadians from bad actors and criminals. They should be encouraged, or better yet, mandated as a requirement for every Digital Asset Dealer in Canada. In this way the privacy of Canadians digital currency transactions would be assured, nationally. The Canadian government should avoid harming Canadians' privacy with over-burdensome and unnecessary regulation.

• What AML/ATF obligations are needed for organizations hosting a Metaverse or having a platform for MSB-like activity conducted through their technology?

Generally speaking “metaverse” projects are entirely centralized platforms that are extensions of companies. They should be regulated as securities.

• What AML/ATF requirements should be extended to fintechs that are currently not regulated? Which types of fintechs would be implicated?

The current regulations are sufficient.

• How can the government ensure that AML/ATF obligations for this sector are technologically neutral so that new technologies that pose AML/ATF risks are incorporated into the Regime in a timely manner?

This answer has been covered for previous questions.

Bulk Cash

• Should the government amend legislation to mitigate vulnerabilities of large cash transactions, for instance by:

• Extending large cash reporting requirements to all businesses in Canada over a certain threshold, or

• Prohibiting cash purchases over a certain threshold?

No.

• For each option, what would be an appropriate threshold?

With all due respect, if you want to make the case for Bitcoin even more pronounced, by all means regulate the last beneficial features of fiat cash – its anonymity and large purchase potential.

There really should be no limit on cash transactions, to even suggest one violates most of the principles of free and open capitalist societies. Furthermore, when a threshold is set, it never seems to be updated to reflect the impact of inflation and ever rising prices. In the year 2030, do we really want to be making large transaction reports for every bulk food purchase each time a Canadian shops at Costco?

I don’t think so, and if you do, you’re power mad.

Extending reporting requirements to all businesses in Canada for large transactions is over-burdensome for small businesses. Not to mention, these policies are generally ineffective in their stated goal. Enforcement is what’s needed, not more useless and privacy-harming mass drag net data collection.

This is pure, bureaucratic, mission creep via leading questions.

Do better.

Exemptive Relief for Testing New Technologies

• Should the government amend the PCMLTFA to allow FINTRAC to provide short-term exemptive relief to reporting entities to allow testing of new technologies and methods to comply with AML/ATF obligations?

• Under what limited circumstances should this permitted?

• What safeguards should apply to ensure the integrity of Canada's AML/ATF Regime is maintained and FINTRAC continues to deliver its core mandate? Source of Wealth/Funds Determinations

• Should the government amend the PCMLTFA and/or its Regulations to require all reporting entities to take reasonable measures to establish the source of wealth of an individual when conducting a financial transaction or transfer of a certain threshold?

• If so, what would be an appropriate threshold (e.g., $100,000 or more)?

• Are there are other circumstances in which reporting entities should be required to take

reasonable measures to establish the source of wealth or source of cash or virtual currency?

Source of funds requirements are extremely invasive and burdensome for Canadian companies, consumers and citizens. Canadians do not want to perform an audit every time they make a large purchase. Furthermore, the threshold dollar amount for this invasive practice always seems to be getting lower due to inflationary pressure on all goods and services. Ideally there should be no threshold reporting requirement. The scope of these current requirements should not be expanded beyond their current thresholds or to other parties like small businesses. To do so will only fuel the underground economy and make the case for further adoption of alternative private payment methods. In short, this regulation will do nothing to mitigate crime, rather it simply moves the goal posts. Criminals will adapt, easily.

Regular Canadian citizens, seniors, and the financially vulnerable will suffer as a result of these over-burdensome, invasive mini audits. The cost of completing these mini audits by businesses is also a burden that eventually gets passed on to Canadian consumers. Furthermore, the treasure trove of data collected through this reporting requirement, deposited to centralized databases, makes this a honey pot in the making for bad actors to copy, paste and exploit.

In short, please do not expand this invasive practice beyond its current scope. It’s already harmful. To expand it further will do more harm than good. To “provide exemptive relief” on a temporary basis to a select few entities is a stopgap form of gas lightning. The question as posed assumes a forgone conclusion of the underlying matter being settled.

The matter of invasive, unnecessary and harmful mini audits is not settled. Do not proceed.

Do not go pass Go.

Part IV - National and Economic Security

The government is seeking views on the nature and scope of FINTRAC's role in helping to counter threats to Canada's national and economic security, and contribute to its sanctions and counter-proliferation framework:

• Should reporting requirements to FINTRAC and/or other obligations be amended to help better detect the financing of terrorist activities, including those conducted by lone actors and where transactions may be in small amounts or difficult to distinguish from activity that would otherwise appear legitimate?

No. Expanding FINTRAC’s mandate will only make it even more of a honey pot for sensitive data on honest Canadians. It will not help to prevent, reduce, or enforce against the behavior you are concerned about.

• Is the definition of threats to the security of Canada under the CSIS Act (which is used in the PCMLTFA) sufficient to capture the range of illicit financing activities that could compromise Canada's economic integrity and prosperity?

It is likely sufficient as it is.

• Should FINTRAC take a more proactive role in combatting sanctions evasion?

That depends on the specifics of what proactive mean. Likely no, it should not for reasons already stated and alluded to else where.

• Should businesses with obligations under the PCMLTFA be required to report to FINTRAC on suspicions of threats to the security of Canada, economic security, proliferation financing or sanctions evasion, in addition to money laundering or terrorist financing?

No. They already make these reports to one entity, they should not be required to duplicate these reports to another. Doubling reporting requirements is a recipe for disaster on multiple fronts.

• Should FINTRAC's mandate be expanded to include a stronger intelligence or compliance role related to threats to the security of Canada, economic security, proliferation financing, and sanctions evasion?

No.

FINTRAC was not designed as an intelligence agency and should not have it’s mandate be expanded to one for reasons already described and alluded to.

• Would these authorities be better split among other government departments?

Intelligence operations and authorities are the jurisdiction of intelligence agencies. They should remain in such respective agencies under current legislative powers.

• What issues could arise from the implementation of a broader mandate?

Legal challenges and data leaks.

• Should the Minister of Finance have additional tools under the PCMLTFA to help mitigate national security or other risks to Canada's financial system, including risks to its integrity or reputation?

No.

Giving the Finance minister more unchecked powers that are in the realm of other ministers is mission creep and fundamentally changes the current power dynamics of our democracy. Given recent events surrounding the Government's role in censoring honest Canadians financial accounts for lawful activity, such an expansion of powers would be perverse, unethical, rewarding bad behavior, and just plain wrong.

These past few years, The Government of Canada, specifically the Finance Minister and department has shown itself to be, plainly, power hungry for its own sake. It is therefore, not surprising that this question for more powers to be granted to the Finance Department is being asked, by the Finance Department!

Very convenient and self serving.

I cannot recommend strongly enough for Parliament, Senate, and Honorable Representatives to squash this proposal of expanded powers for the Finance Minister and Department. Both have shown a wanton disregard for the liberties of honest Canadians. They can not be trusted with even current powers, why should they be granted more?

And this is not just about the current political party in power. It’s about all future political parties too, who would have these same expanded, likely unconstitutional, powers for the Finance minister. It’s a fundamental change in the power structure arrangement of Canada and should be avoided.

• Should the Minister of Finance be allowed to recommend, through a regulatory process, the limitation or prohibition of financial transactions with Canadian reporting sectors or entities (as is currently the case with foreign entities) if there are materials money laundering, terrorist financing or national security risks?

Depends on the regulatory process. But likely no – see my above comments in the previous question for why. Any such implemented regulatory process will likely be jury-rigged and watered down as to be a rubber stamp for the whims of the Finance Minister. No matter the party.

LNURL: bitc0in@stacker.news "