Canada is now legally recognizing cryptocurrency exchanges and payment processors as Money Service Businesses (MSB).
The new regulation, which is the amendments to Proceeds of Crime (Money Laundering) and Terrorist Financing Act passed in June 2019 was enacted on June 1st, 2020. Addressing the holes in the framework, Canada now classifies crypto companies as the ones that provide money services.
Both domestic and foreign companies that want to provide services to Canadian customers will be regulated as Money Services Businesses (MSBs) which means they have to register and comply with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
“MSBs will now include domestic and foreign businesses that are ‘dealing in virtual currency.’ These ‘dealing in’ activities include virtual currency exchange services and value transfer services,” states the amendment to the law.
“As required of all MSBs, persons and entities dealing in virtual currencies would need to fulfill all obligations, including implementing a full compliance program and registering with FINTRAC.”
This also means all transactions exceeding 10,000 Canadian dollars ($7,400) must be reported by Candian crypto firms.
Bitcoin regulated like money
The legislative amendment was initially passed in 2014 by the Canadian parliament and after five years, it has finally come into effect.
“Today is my last day as an unregulated dealer in virtual currency. As of June 1, 2020, Bitcoin exchanges and payment processors are officially regulated as Money Services Businesses in Canada,” said Francis Pouliot, CEO of Candian crypto exchange BullBitcoin. He added,
“Bitcoin is money, it should be regulated like other money, no more no less.”
Most of the businesses dealing in cryptocurrencies already have their know-your-customer (KYC) measures in place as required by their banking partners. This law would cover, but not limited to, Bitcoin trading platforms (order books), exchange platforms, OTC desks, and custodial wallets. However, it will particularly affect cash-based businesses like Bitcoin ATM operators.