A Canadian government official has said bitcoin is not considered legal tender in the country, according to a report in the Wall Street Journal.

"Only Canadian bank notes and coins are recognized as legal tender in Canada. Bitcoin digital ‘currency’ is not legal tender in Canada," the official reportedly wrote in an email.

The official from the Department of Finance, who was not named in the article, went on to say the federal government and Canadian regulators would "continue to monitor developments involving virtual currencies" but would not say whether the government would officially license fiat-to-digital currency exchanges in future.

While we've seen plenty of comments recently from governments around the world that bitcoin is not a "currency", this remark stands out in its use of the term "legal tender." However, recognition that a currency is not legal tender does not make bitcoin or any other payment method "illegal" as such.

Some Canadian businesses, especially those in tourist locations and near the US border, accept US dollars. Additionally, businesses are generally free to choose for themselves which payment types they will accept, so long as the income is reported for taxation purposes.

The WSJ report also quoted a Bank of Canada official as saying regulators would take a greater interest in bitcoin if it became large enough to pose a risk to the stability of the Canadian financial system, but would be less concerned if it remained a smaller, stand-alone payment system.

Canada has so far appeared to present a more permissive environment for bitcoin startups than the US, where businesses often need to register as money transmitters in each state separately.

Vancouver, British Columbia, was the site of the world's first two-way bitcoin ATM installation, which has been an enormous success for its US manufacturer Robocoin and Canadian partner Bitcoiniacs. A second machine opened for business in Toronto just this week. Further east, in Montreal, is the world's first and only Bitcoin Embassy and information center.

In late 2013, there was even some hope that the Canadian government would bestow some kind of legal recognition on bitcoin. A November fact sheet published by the Canada Revenue Agency (CRA), Canada's taxation agency, referred to bitcoin as "virtual money" and "digital currency."

The paper did, however, point out that bitcoin should be considered distinct from "traditional currency."

World government and central bank statements in the months since then have stressed that bitcoin is not a "currency" by any official definition, which usually includes only state-issued payment systems.

They have also shown a preference for the word "virtual" over "digital." While similar in meaning, especially in the technology world, the former term carries a subtle nuance of unreality.

The UK Royal Mint says of the term "legal tender":

"It does not mean that any ordinary transaction has to take place in legal tender or only within the amount denominated by the legislation. Both parties are free to agree to accept any form of payment whether legal tender or otherwise according to their wishes."

Ottawa and Bitcoin Image via Shutterstock