Governments around the world have been hard at work to determine their positions on digital currencies and services related to them. While increasing regulation is seen by some crypto aficionados as a threat to the budding industry, many in the crypto sphere are waiting for their implementation, as stricter rules are expected to bring in an influx of institutional funds.
Canada is the latest country to define its official on stance on cryptocurrencies, as it has released an official draft with new rules for crypto exchanges and payment providers. The fresh regulations aim to address deficiencies in the anti-money laundering (AML) and anti-terrorism financing (ATF) policies of Canada that the Financial Action Task Force (FATF) discerned back in 2015 and 2016.
The new regulation will re-classify all businesses involved with virtual currency as Money Services Businesses (MSB). Canada considers MSBs to be businesses that deal with money but are not official chartered banks.
According to the official statement, “Persons and entities that are “dealing in virtual currency” would be financial entities or other entities deemed domestic or foreign MSBs, as the case may be. As required of all MSBs, persons, and entities dealing in virtual currencies would need to implement a full compliance program and register with FINTRAC.”
FINTRAC stands for Financial Transactions and Reports Analysis Centre of Canada and requires companies to have complete know-your-client (KYC) and AML procedures and also report any suspicious activity on their platform immediately.
The KYC rules have also been tightened, with crypto businesses now required to report all transactions over $10,000 CAD ($7,700 USD). The new limit for a customer has been lowered to $1000 CAD ($770 USD), which means that traders will not be able transact over $1000 CAD worth of virtual currency, unless they provided their full name, address, telephone number, date of birth and occupation.
Understandably, many of Canadian crypto enthusiasts are not happy with such developments. Francis Pouliot, a co-founder of Montreal blockchain consulting company Catallaxy tweeted the following response:
New requirement: "Large Virtual Currency Transaction Record" means businesses required to ask for and keep details of every transaction over $10,000, like large-cash transaction reports. That's going to be extremely difficult and invasive to implement. I will object to this. pic.twitter.com/PdabH0uGj4
— Francis Pouliot ☣️ (@francispouliot_) June 8, 2018
The Canadian government believes that the new regulations will be able to tackle the ever-present money laundering and terrorist financing threats without hindering the innovation to the crypto industry. If the new amendments are fully accepted, they will come into effect only a year after their registration.
Canada has long been seen as one of the most financially stable nations worldwide. The country managed to avoid major bank crisis during the Great Recession of 2008 and many believe this was achieved mostly due to strict rules and reporting for chartered banks and MSBs.
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.