Canada to Heighten Oversight on Cryptocurrency Exchanges
Canadian authorities are poised to intensify its supervision of bitcoin investors and cryptocurrency investors in the market with the proposed regulations.
Under the planned rules, Canadian crypto bourses will be categorized as money service businesses (MSBs) and will be required to report trades amounting to at least $10,000, based on the Regulatory Impact Analysis Statement released by the Department of Finance Canada.
“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. These ‘dealing in’ activities include virtual currency exchange services and value transfer services. As required of all MSBs, persons and entities dealing in virtual currencies would need to implement a full compliance program and register with FINTRAC. In addition, all reporting entities that receive $10,000 or more in virtual currency (e.g. deposits, any form of payment) would have record-keeping and reporting obligations,” financial regulators said.
Authorities added they are making these amendments to alleviate money laundering and terrorist activity “financing vulnerabilities of virtual currency” in line with Canada’s existing legal framework while continuously encourage innovation.
“The proposed amendments would help address and close the gaps that exist in Canada’s AML/ATF [Anti-Money Laundering and Anti-Terrorist Financing] Regime, including regulating new business models and technologies, and address new emerging risks,” it added.
This would also update the following: client due diligence requirements and beneficial ownership reporting requirements, regulation of transactions done using digital currency, and implementing minor technical changes, among others.
The Canadian government projected the imposition of the proposed rules would amount to more than $270,000 as well as lead to a total annualized administrative cost increase on enterprises that is projected at $463,098 after applying the modifications on these rules.
“The proposed amendments would result in an estimated $1,867,698 (present value [PV]) in benefits and $61,132,622 (PV) in costs, for a net cost of $59,264,925 (PV) over a 10-year period in 2012 dollars,” it added.
Prior to this move, the registration with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is already in place. Many Canadian bourses have voluntarily enlisted themselves in a move to straighten out regulatory uncertainty.
Founded in 1867, the Department of Finance Canada, an office under the umbrella of the Minister of Finance, is responsible for ensuring a thriving Canadian economy by designing policies pertaining to reasonable economic management and giving the government a good advice about economic affairs and the like.
Canada is a founding member of Financial Action Task Force (FATF), an intergovernmental body which outlines standards and promotes effective enforcement of various laws and measures to grapple with money laundering, terrorist activity financing, and other illicit activities which endanger the financial system.
Although FATF standards are not legally binding, Canada is obliged to impose such standards and submit an assessment of the effectiveness of implementing these regulations.