On the long and stony path of mainstream adaptation, the acceptance of governments is regarded as a milestone. A Canadian small town in Ontario is now discussing a pilot project for paying taxpayers’ money in crypto currencies. The implications of such a project are likely to cause a broad grin.
Bitcoin and other crypto currencies have been getting bad press in Canada lately. This was due to the ominous disappearance of the head of the Canadian Exchange QuadrigaCX. The city council of the Canadian small town Innisfil, near the US-American border, could soon cause a headwind. At a city council meeting on 27 March, Jason Reynar, known as a progressive politician, proposed that citizens and businesses should be able to pay contributions to the public community and pay property tax in the form of crypto currencies.
The small town of Innisfil
Innisfil is considered an innovative city. The two speakers, Reynar and his colleague Davis Lockie, see the adaptation of crypto currencies as an opportunity to further extend the city’s technological lead. Among other things, they point to cheaper fees than credit card payments:
In order to pay property tax with a credit card, you have to use a payment processor (called Plastiq). This is linked to transaction fees, which the owner must pay directly to this service provider (the fees are approx. 2.9 percent).
Assuming that such payments can be processed in crypto currencies, fees will still apply. But according to Reynar and Lockie’s proposal, these would fall to 0.5 percent. Their draft further states that they would commission the payment processor Coinberry Limited on behalf of the city administration.
Coinberry Limited is a Canadian FinTech company that also acts as an exchange. Founded in 2017, Coinberry Limited is registered with the Financial Services Authority (FINTRAC), adheres to the KYC principle and complies with anti-money laundering regulations. The problems arising in the course of the QuadrigaCX bankruptcy – the separate storage of customer and company credit balances, the use of multi-signature wallets, etc. – are excluded at Coinberry Limited. As one of two Exchanges in Canada, Coinberry Limited was classified as credible and reliable by the independent management consultancy. In addition, the leading cyber security company regularly checks the platform for security vulnerabilities.
So that the city of Innisfil is not forced to own crypto currencies, Coinberry Limited directly converts the payments received into the local currency and credits the city with the corresponding amount,
said the two speakers. Price fluctuations would of course be taken into account in the event of confirmation delays on the blockchain. In the case of short-term price fluctuations, the contributor pays the difference back or gets it credited. However, it is up to the city to decide whether the possession of crypto currencies might be a sensible option in the future.
Freedom for citizens and businesses
Interested parties in this new payment system have the choice of registering with Coinberry Limited or using an existing wallet. So far, the most cost-effective payment option for contributions to the community has been direct debit. According to the report, 22 percent of those liable to pay contributions use this method. Reynar and Davis advise the city administration on a one-year pilot project with subsequent evaluation. Afterwards one could discuss whether payments in crypto currencies should continue to be possible in the future.