The wording of the legislation, which comes under the gripping title “An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014 and Other Measures”, essentially classes Bitcoin and other cryptocurrencies as money. Hence, they’re to be treated in the same way. The legislation was passed earlier this year, but has only now received royal assent (essentially its been rubber-stamped into law by the Queen’s representative).
Once the law comes into force (CoinDesk says there’ll probably be a six month grace period), companies dealing in cryptocurrencies will be classified as ‘money services businesses’, and henceforth be subject to record keeping, verification procedures, suspicious transaction reporting and other requirements.
Bitcoin-related businesses such as exchange operators and ATM networks will have to register with Canada’s Financial Transactions and Reports Analysis Centre (Fintrac). They’ll also have to introduce anti-money laundering measures. Meanwhile, Canada’s banks will be barred from providing services to those companies that do not register with Fintrac.
It’s not just Canadian Bitcoin businesses that’ll be affected – foreign companies that wish to do business with Canadian citizens will also be affected.
“Part of the concern with such laws is whether they strike a balance between combating financial crime and supporting innovative technology development,” said Christine Duhaime, senior financial crime advisor at consultancy MNP. “The concern is that venture capital for Bitcoin start-ups may dry up if legislative obligations prove to be too onerous or expensive.”
This isn’t the first time Canada has complicated things for Bitcoiners. Last April, the Bank of Montreal reportedly closed down several accounts associated with Bitcoin businesses. The following month saw the Bank of Canada warn that Bitcoin could one day disrupt global financial stability if it remained unstable and unregulated.
photo credit: zcopley via photopin cc
June 25, 2014 at 06:07AM
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