The Canada Deposit Insurance Corporation (the “CDIC”), a federal Crown corporation offering deposit insurance for eligible deposits, issued a reminder last week that it does not offer protection for private digital currencies such as Bitcoin. The CDIC continues to cover deposits in Canadian dollars with member institutions only, such as chartered banks.
Bitcoin, a form of digital currency which has grown exponentially in popularity in recent months, can be acquired through trading or a process called “mining”. Once acquired, Bitcoins need to be deposited into a virtual wallet. A Bitcoin wallet acts as a safekeeping device that allows users to send and receive Bitcoins in exchange for goods and services.
This press release was made amidst declining Bitcoin prices. In the announcement, the CDIC noted that, “[w]e recognize that Canadians are using new technologies to make payments, but they should be aware that CDIC deposit insurance coverage is limited…when it comes to your deposits, it’s important to get the whole picture.”
In light of this announcement and as the volume and size of Bitcoin related transactions is trending upwards, it is crucial that Bitcoin holders consider the safest virtual wallets available as well as any alternative precautions (such as offline storage devices) for protecting their Bitcoin deposits.
The post was co-authored by Andre Garber, Director, Dentons Canada Startup Program and Chris Payne, Articling Student.