Canada Officially Classified Cryptocurrency Companies as Financial Service Businesses

Canada has recognized cryptocurrency handling companies such as exchanges and payment service providers, as legitimate ‘Money Services Businesses (MSB)’, as the money laundering and terrorism financing act (PCMLTFA) amendment started acting.

The new legislation took effect on June 1. From now on, cryptocurrency firms should register with the National Financial Transaction Reporting and Analysis Center (FINTRAC) as financial service companies and comply with relevant regulations including reporting transactions totaling to over 10,000 Canadian dollars (approx. $7.4k USD).

Since 2014, the crypto industry representatives have been cooperating closely with the Ministry of Finance and FINTRAC to legalize the digital currency industry. They agreed with each other, but it took them around 5 years to negotiate regulatory coverage and details.

Operating in line within the existing regulations

Currently, cryptocurrency firms are already complying with regulations, such as introducing an authentication process while establishing partnerships with banks and payment processors. The effort will have a big impact.

This action in Canada is an institutional procedure to execute the implementation of the recommendations for the final regulatory guidelines for cryptocurrency proposed by the International Anti-Money Laundering Organization (FATF). The FATF plans to verify the legislative status of each country’s cryptocurrency and check the implementation status of the system through mutual evaluation of member countries.

Cryptocurrency regulation is underway

Some countries are also working to draft more effective regulations to strengthen their digital currency and blockchain sector. For example, in 2019, Cyprus started working on DLT and crypto regulation and it is soon completing the process, according to coinidol.com, a world blockchain news outlet. The Finance Minister Harris Georgiades believes this will transform the finance sector significantly. In June last year, San Marino also approved the DLT and crypto asset regulation to manage all of its blockchain-related innovations and activities.

Last year still, US presidential candidate in 2020 Andrew Yang and Harold Ford Jr, a former US Congressman called for effective blockchain and crypto asset regulation, and advised the authorities to avoid making half-measures. The latter warned that if the regulation is not made as soon as possible, it might put a big damage on disruptive innovations in the time yet to come.

Other cryptocurrency-friendly countries may follow suit by amending their laws governing the financial sector to create more room for digital currency business and activities to operate legally.