FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) is working on a regulation plan for Money Services Businesses (MSBs) dealing in virtual currencies, a series of rules that will most likely come to force in 2015.
The Canadian financial regulator said that changes to the Proceeds of Crime and Terrorism Financing Act, a list of rules that facilitate combatting the laundering of proceeds of crime and combating the financing of terrorist activities, "will aim to cover entities such as virtual currency exchanges, not individuals or businesses that use virtual currencies for buying and selling goods and services," according to an official publication issued on July 30.
The statement noted that the regulations will come into force once published in the Canada Gazette, the official newspaper of the Government of Canada. According to information gathered by the Bitcoin Foundation Canada, the official Canadian chapter of the lobby group, the rules are most likely to be published in 2015.
Until the new regulations are drafted and in force, MSBs that need to register with FINTRAC are those that are engaged in the business of any of the following services:
- Foreign exchange dealing: conducting transactions where one type of fiat currency is exchanged for another fiat currency;
- Remitting or transmitting funds by any means or through any person, entity or electronic funds transfer network; or
- Issuing or redeeming money orders, travelers' cheques or other similar negotiable instruments.
The announcement came couple weeks after the issue of the 'BitLicense' proposal regulation plan by the State of New York, a 40 page document that was designed to strictly trigger every cryptocurrency related business. The plan gave rise to discontent and protests among the community and was largely qualified as inappropriate and abusive by its members.
- Benjamin Lawsky, Superintendent of NYDFS, who issued the BitLicense draft
A few days ago, the Bitcoin Foundation Canada shared its own opinion on cryptocurrency regulation and issued the report "Bitcoin and the Law", a document that stresses the fact that Bitcoin is already regulated and that regulatory proposals are unnecessary. The organization highlighted the necessity of looking at particular function or service being performed, rather than the technology itself.
While digital currencies are gaining more attention and popularity, lawmakers are struggling to design an appropriate legal framework that would both not neglect the fundamentals and the specificities of the technology itself, and combat money laundering and related financial crimes.