Omnibus bill introduces reporting standards
TORONTO, June 23, 2014 /CNW/ - Canada has become one of the first countries to implement comprehensive legislation regulating and overseeing Bitcoin and other digital currencies.
On June 19th, Canada gave Royal Assent to Bill C-31, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014 and Other Measures. The bill includes provisions on virtual currencies like Bitcoin, requiring similar reporting and regulatory standards applied by traditional financial markets. The new law regulates Bitcoin as a "money service business" and specifically addresses dealers in virtual currencies. It is expected to cover Bitcoin exchanges and ATMs.
"Canada has been like the 'wild west' when it comes to digital currency regulation," said Matthew McGuire, national leader of AML Services with MNP LLP. "This legislation is long overdue. There is a lot of work to be done to bring Bitcoin exchanges into compliance in the next few months."
The amendments make Bitcoin and all digital currencies subject to the requirements currently applicable to money services businesses. Bitcoin exchanges will now be required to register with FINTRAC, report suspicious and other transactions, keep certain records, implement compliance plans, and determine if any of their customers are "politically exposed persons." Bill C-31 applies to Bitcoin companies that have a place of business in Canada and outside Canada, who direct services at persons or entities in Canada.
"This is intended for external Bitcoin companies doing business in Canada who will have to comply with Canada's anti-money laundering legislation," said Christine Duhaime, a senior financial crime advisor with MNP LLP. "Part of the concern with such laws is whether they strike a balance between combating financial crime and supporting innovative technology development. The concern is that venture capital for Bitcoin start-ups may dry up if legislative obligations prove to be too onerous or expensive. But this legislation is an important step forward."
It is estimated that almost $300 million will be invested in Bitcoin start-ups by venture capitalists by the end of 2014 worldwide, with Canada receiving the second largest portion of that funding after the US.
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SOURCE MNP LLP