Blockchain was first theorized as a concept in the early 1990s. However, it took 20 years before blockchain was utilized to create Bitcoin, the first cryptocurrency, in early 2009. While the use of blockchain to create cryptocurrencies took nearly 20 years, its popularity has exploded since the creation of Bitcoin.
Despite the meteoric rise of cryptocurrencies, the first tax legislation to specifically address them was proposed at the beginning of 2022, over a decade after the creation of Bitcoin. Specifically, the legislature proposed the addition of section 188.2 to the Excise Tax Act. Section 188.2 is drafted specifically to address crypto mining’s GST/HST treatment.
While this is a good first step, it should be noted that crypto mining is only one aspect of cryptocurrencies and there are still significant uncertainties as to their proper treatment in other situations. Further, the uncertainty is only going to become a larger problem as blockchain, and cryptocurrencies are used in new and novel ways.
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