Fears that Bitcoins will become a currency of choice for shady transactions are overblown, the co-founder of Ottawa-based BitAccess said Friday, responding to a recently released Finance Department memo from May of last year warning the digital dollars could attract criminal activity.
The memo said Bitcoin’s high level of anonymity and lack of regulation are two elements that could lead to money laundering or terrorism funding, but Haseeb Awan took exception to both those points.
“Every transaction is traceable. It’s public, a very public record,” he said. “You can go online if you have an account, you can trace who sent you the money, what time they sent you the money, how much money you have in your account and every detail is available online so this is not anonymous right now.”
Mr. Awan said there should be no special regulation just for Bitcoin transactions.
“Whatever regulations apply to the money transfer business, apply them as it is. No more, no less,” he said.
BitAccess was founded last November and produces Bitcoin automatic teller machines (BTMs). It currently has machines in six countries around the world, including one in downtown Ottawa and one in Kanata.
Resilient 21 is an Ottawa Bitcoin professional services firm that provides point-of-sale access for retailers who want to use the technology. It also manages BitAccess’ Ottawa BTMs.
The company’s president, Alastair Mitchell, said there is always a learning curve with new technology and anything that can be used to make people’s lives easier can also be used for “nefarious reasons.”
He said he has seen no evidence of criminal Bitcoin use, but if it exists, he said it is probably a fraction of what happens with traditional cash.
While agreeing transactions can be traced, the Finance Department memo said it was hard to do and would tax police resources.
All transactions can be traced on what is called the block chain. Everyone who registers to use Bitcoin gets an address.
“The problem from a police perspective,” said Mr. Mitchell, “is that you don’t know who that address belongs to.”
He said if you have other information, such as an e-mail address, it is possible to link that address to the Bitcoin address.
“It is pseudo-anonymous as opposed to anonymous,” said Mr. Mitchell.
Changes to bring Bitcoin transactions within the scope of Canada's anti-money laundering law received royal assent last month and Mr. Mitchell said he doesn’t anticipate any additional measures from the government to further regulate Bitcoin use.
“They seem to be taking the long-term view and seeing exactly what Bitcoin is and how it works and I’m hoping they don’t want to add any regulations that would negatively affect the innovation going on in the space right now,” he said.
According to coinmap.org, there are 16 businesses using Bitcoin in Ottawa-Gatineau.
Mr. Mitchell said these businesses love it because they don’t have to pay fees like they do with credit card transactions.
“There’s no chargebacks, so they see a definite advantage to that, including expanding their customer base,” he said.
He said Bitcoin use is on the rise and as smaller companies see billion-dollar corporations use it, they are more likely to get on board.
In the meantime, his company will continue servicing its existing clients and offer consulting services to other customers who want to learn more about the technology.
“Once people start understanding the nuts and bolts of Bitcoin, the picture becomes a lot more clear and they are able to make a lot better educated decisions on whether to accept Bitcoins,” he said. “I’m sure the government is doing their own research too. The more you know, the better.”