Canada Makes It Necessary for Crypto Exchange to Register With Its Financial Regulator
With big organizations joining the crypto industry, there’s a sense of urgency seen among the global financial regulators introduce regulatory framework.
As per an official notice published on Wednesday, July 10, the Canadian government has asked all the local cryptocurrency exchanges to register with the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC). The government has put a deadline of one year and asked the exchanges to complete the registration process by June 1, 2020.
Canada’s new anti-money laundering (AML) laws will come into existence by the next year, and following it, the new requirements for the crypto exchanges will come thereafter.
As part of the new amendments, the crypto exchanges will strictly need to implement its KYC policies and report any suspicious transactions to the FinTRAC regulatory watchdog. The exchanges will also be asked to maintain the client records and a compliance offer who looks after all the regulatory matters.
Under the new rules, both local exchange and foreign exchanges operating in Canada shall be treated as money servicing businesses (MSBs). The official notice mentions that the MSBs must “fulfill all obligations, including implementing a full compliance program and registering with FINTRAC [the Financial Transactions and Reports Analysis Centre of Canada].”
Furthermore, all exchanges receiving deposits or payments above CAD 10,000 should record the transaction, identify the customers transacting this value, and report it to the concerned authority.
The government said: “These amendments serve to mitigate the money laundering and terrorist activity financing vulnerabilities of virtual currency in a way that is consistent with the existing legal framework, while not unduly hindering innovation. For this reason, the amendments are targeted at persons or entities engaged in the business of dealing in virtual currencies, and not virtual currencies themselves.”
Well, it is difficult to say how these new rules will impact the operations of global exchanges currently doing business in Canada. Canada, as such, has remained as an open market for crypto trading and crypto mining activities.
Besides, every crypto friendly nation like the U.S., Japan, and parts of Europe are taking regulatory measures in accordance with the changing scenario in the crypto market.
This announcement comes after a major hack of QuadrigaCX exchange shocked Canada earlier this year. The untimely death of its founder and CEO Gerald Cotten caused the exchange to file for bankruptcy as he was the sole caretaker of the private keys to the company’s cryptocurrency wallet and didn’t pass it to other employees. Nearly $200 million worth customers’ funds were supposedly lost.