Digital currencies such as Bitcoin will no longer be exempt from Canadian reporting and regulatory requirements that currently apply to all other money services businesses.
The federal government passed a law June 19 that makes Bitcoin subject to the same standards that apply to traditional financial markets. The rules will apply to all Bitcoin exchanges and ATMs .This moves makes Canada one of the first countries to implement legislation that regulates digital currencies.
“Canada has been like the ‘wild west’ when it comes to digital currency regulation,” said Matthew McGuire, national leader of AML Services with business consulting firm MNP LLP.
“This legislation is long overdue. There is a lot of work to be done to bring Bitcoin exchanges into compliance in the next few months.”
In addition to following the money services regulations, all Bitcoin exchanges in Canada are now required to register with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), an independent body that reports to the federal Minister of Finance whose main mandate is to prevent money laundering and the financing of terrorist activities.
Bitcoin companies from outside the country will also need to comply when doing business in Canada.
Christine Duhaime, MNP’s senior financial crime adviser, said these regulations are an important step forward, but it is not a simple matter.
“Part of the concern with such laws is whether they strike a balance between combating financial crime and supporting innovative technology development,” Duhaime said.
“The concern is that venture capital for Bitcoin startups may dry up if legislative obligations prove to be too onerous or expensive.”
