Is Cryptocurrency Money And Why Does It Matter?

The emergence of Bitcoin heralded the era of crypto and digital currencies designed for use in the general economy. But are these new currencies considered money and is current Canadian law adequate to accommodate them as money?

What You Need To Know

Cryptocurrency denotes a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the execution of payment transactions on a decentralized network. "Money" is an element in definitions that determine the scope of a few statutes. As well, unlike property in general, money passes to a taker in good faith for value free of all adverse claims. Currency legislation in Canada does not define "money." Specific statutes may focus on national sovereign money but do not restrict the meaning of the term otherwise. The use of private currencies is legally recognized; however, whether a given cryptocurrency is money depends on whether its features meet the elements set out in case law and literature. Hence, a general recognition of cryptocurrency as money will not be appropriate. What ought to be considered is the adoption of amendments to the Currency Act, as well as other statutes, clarifying that money need not necessarily be limited to official national currencies. Introduction

A digital coin is "an entity that amounts to a string of bits." The string must have a numerical value and it must have a unique identity.1 For its part, cryptocurrency consists of digital coins in which encryption techniques are used to regulate the generation of units of currency and verify the execution of payment transactions on a decentralized network.2

So, is cryptocurrency money? Money is required for the application of some statutes like the Sale of Goods Act3 and the Bills of Exchange Act.4 Accordingly, a transaction in which payment for goods is made other than in money is a barter and is not governed by the Sale of Goods Act. Consequently, for example, a buyer in a barter will not benefit from the statutory implied conditions relating to the goods.5

By the same token, an instrument payable other than in money is not a negotiable instrument and is not governed by the Bills of Exchange Act. Consequently, for example, neither holding in due course nor giving value presumption will benefit its 'holder' who may not be even entitled to sue on it on his or her name.6

Additionally, money differs from any other item of property in that it "[cannot] be recovered after it...