Canada’s Next Step in Cryptocurrency

 In Industry, News

Canada’s Next Step in Cryptocurrency

On June 9, 2018, the Canadian government published a draft of the upcoming changes regarding cryptocurrency exchange and payment processing companies. This publication was released via the Canada Gazette, the official newspaper of the Government of Canada. These changes are made to better regulate and address deficiencies regarding cryptocurrency. The regulations focus on the prevention of money laundering and terrorist funding.

Canada is the first mover in terms of how regulations of cryptocurrency should be done within the financial market. The regulatory change is estimated to cost $61 Million over the next 10 years to implement and manage.

cryptocurrency exchange

The Changes

Companies who have dealings in virtual currency will now be labeled as Money Services Business (MSBs). Under MSBs, these companies will need to follow regulations under Financial Transaction and Reporting Analysis Centre of Canada (FINTRAC). These regulations include the reporting of large transactions ($10,000 Canadian or more) and a Know Your Customer (KYC) system. These regulations will provide secure transactions online and set a solid foundation for trading online. With large transactions, both parties information would be recorded to allow transparency and keep both parties secure.

Effect On Crypto and Canada

Pros

  • Safer trading – both buyers and sellers trading high volumes have all their information registered
  • Government support – Allowing crypto to be traded and not banned
  • Trust – having the government backing crypto would mean more individuals could start trading in Canada compared to other parts of the world; increasing money flow

Cons

  • KYC – A lot of data needs to be collected, recorded and managed by both the client and money service businesses end
  • The $61 Million cost to the government for the implementation
  • The implementation does not include the financial impact on the money service businesses, which in turn could lead to increased trading costs

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