Assessing the Emergence of "Alternative" Currencies and Legal Risk: The Consumers Perspective


Public Interest Advocacy Centre


Public Interest Advocacy Centre (PIAC)




Over the course of the last decade, cryptocurrencies have continued to grow in value, capturing the public imagination in the process. However, the potential uses of these currencies as a payment system in the online retail market remains highly problematic due to the volatility and unpredictability of these assets. Furthermore, the absence of a robust regulatory framework governing cryptocurrencies has the potential to jeopardize consumer welfare. The objective of this Public Interest Advocacy Centre (PIAC) study is to assess the risks that cryptocurrencies pose to Canadian consumers and to recommend regulatory measures that will strengthen consumer protection in Canada. To investigate this issue, PIAC has drawn upon insights from documentary and literary sources, input from stakeholders, and international practices and frameworks.

According to the data collected in this study, cryptocurrencies don’t seem to have much relevance for the average Canadian consumer. This is primarily due to the sharp fluctuations in the value of these assets, as well as the risks associated with this relatively new technology. According to this study, young consumers are more likely to use cryptocurrencies than older generations. It is probable that in the future, cryptocurrencies will come into wider use as a payment system for online retail sales. However, for that to happen, a more comprehensive regulatory regime will be required. This study also found that central banks are particularly apprehensive about the possibility of cryptocurrencies operating as mainstream payment systems, citing fears that speculative bubbles may accompany the growth of unregulated currencies. To guard against these risks, PIAC has identified 4 key policy recommendations. Firstly, that a consumer education and awareness plan be adopted in order to inform people of the risks associated with cryptocurrencies, and to lend greater publicity to the resources already available to consumers. Secondly, PIAC recommends that consumers exercise caution when using cryptocurrencies and be aware of the risks involved—which include hacking, theft, and various other scams. Thirdly, it is recommended that the Department of Finance convene a public safety working group of key stakeholders to transparently review the risks posed to consumer welfare by cryptocurrencies and to make recommendations to federal and provincial governments on regulatory initiatives that are worth pursuing. Finally, PIAC recommends that Canada Revenue Agency provide a comprehensive guide for Canadian citizens about the tax liabilities they might incur while using cryptocurrencies.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

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Public Interest Advocacy Centre (PIAC)
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Source: Consumer Policy Research Database

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