Canada has followed the route of many other Western nations in outlining the potential risks and threats to the financial system posed by the peer-to-peer decentralized virtual currency bitcoin. In order to circumvent any dangers by the cryptocurrency market, the Great White North became the first country to pass legislation on bitcoin usage.
The bill, known as Bill C-31, was first noticed by Christine Duhaime, B.A., J.D., Financial Crime and Certified Anti-Money Laundering Specialist, who noted that the piece of legislation was introduced all the way back in February and the Governor General had provided his Royal Assent to it last week.
According to Duhaime, there were a few important changes made in relation to bitcoin and other virtual currencies.
One of them includes regulation for bitcoin: “dealing in virtual currencies,” which was undefined, will require verification procedures, extensive record keeping, registration requirements under the Proceeds of Crime Money Laundering and Terrorist Financing Act (PCMLTFA) as a money services business and suspicious transaction reporting.
Secondly, bitcoin businesses must register with Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Entities will then be required to complete anti-monetary laundering compliance administration work.
Third, financial institutions will be prohibited from establishing and maintaining bank accounts for customers involved with bitcoin businesses that are not registered under FINTRAC. Duhaine noted that this is a crucial element of the bill.
Fourth, the bill targets foreign companies operating within and outside of Canada. An example of this is Coinbase: if it wishes to continue to offers its services inside Canada then it will be required to sign up with FINTRAC.
Lastly, the term “dealing in virtual currencies” remains undefined, which is strange considering that regulation is meant to specifically define certain terms and phrases.
“What the changes mean for Bitcoin businesses internationally that target Canadians, or Canadian Bitcoin businesses, is that they will be required to obtain specialized AML legal advice, which will ensure consistency in advice provided to Bitcoin entities going forward,” Duhaine said in her report. “Canadian economic sanctions, the counter-terrorist financing regime and new Canadian politically exposed person regime in the Bitcoin legal environment is exceedingly complex and most regulators around the world openly admit they struggle with enforcing these aspects of AML law in Bitcoin. The former two (sanctions and terrorist financing) have always applied to Bitcoin entities worldwide.”
Canada has remained pretty active in the realm of digital currencies aside from a growing marketplace.
For instance, the Bank of Montreal had shut down all bitcoin-related accounts, while the Montreal Economic Institute (MEI) posited that bitcoin could not grow without government regulations. The Bank of Canada even suggested that bitcoin could disrupt global financial stability, but noted that it wouldn’t happen for quite some time.
