Canada has made record-breaking changes to its Proceeds of Crime (Money Laundering) and Terrorist Financing Act! It has been cautiously focused on bringing these changes into law since June 19, 2014 protecting investors and the public but also taking the time to better understand and support the Cryptocurrency Industry.
August 24, 2017, Canada started by outlining how security law requirements would apply to Initial Coin Offerings or ICOs , Initial Token Offerings or ITOs, Cryptocurrency Investment Funds, and the Cryptocurrency Exchangers trading these products. One method they used was by researching Blockchain Technology with Project Jasper. Another method was to set up the CSA Regulatory Sandbox to encourage the development of innovative products and services which allowed companies engaged in cryptocurrency matters to seek exemptive relief for a set time-limit while testing their products and services in the Canadian market. The Bank of Canada tested a product and service of their own on the Blockchain to gain needed future insight.
In April 2018 The Bank of Montreal and the Toronto Dominion Bank of Canada banned their credit and debit card customers from buying cryptocurrency with their cards from any entity or exchanger not licensed with Fintrac.
In the year 2020 Canada has instituted the world’s first national law on digital currencies including Bitcoin treating them as Money Service Businesses!! This is also the first treatment in law of digital currency financial transactions under the National Money-Laundering Law!!!
What does this mean for Bitcoin holders in Canada? These are the same requirements as any MSB dealing in Fiat Currencies currently in Canada.
The Dealers and Exchangers being used to exchange Cryptocurrencies into fiat MUST be registered with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Investment Fund Managers are also required to be registered with Fintrac. Every single transaction over $10,000 or more in cash will be reported to the Government. The receipt of 2 or more cash amounts of less than $10,000 each that total $10,000 or more if the transactions were made by the same individual or entity within 24 hours of time must also be reported. All Exchangers are now required to keep and retain accurate and reliable verification records as well as report any transaction that is deemed suspicious or has any relation to terrorist property. The Dealers and Exchangers have the obligation to determine and report if any of their customers are politically exposed persons. These new Amendments to the Law prevent all Banks from opening and maintaining any accounts or having a correspondent banking relationship with companies who deal in virtual currencies unless that person or entity is registered with Fintrac. These laws apply to any non-Canadian company who has Canadian customers and also to all Cryptocurrency ATM’s.
The law is not yet in full force as it is pending issuance of subsidiary regulations. For example, under the current Taxation laws in Canada using cryptocurrency (which is considered a commodity under Canadian Law) to pay for goods and services is treated as a Barter transaction. Cryptocurrencies are not yet considered to be legal tender in Canada. Mining cryptocurrencies is considered to be non-taxable if a personal hobby or undertaken for profit. Commercial Cryptocurrency Miners however, are expected to report their earned income from mining. Following probate all Wills become public documentation in Canada. Before any Estate can be probated Estate Planners must ensure clear instructions are securely and confidentially held which point to the exact location of the private key related to the cryptocurrency. This Private Key cannot be included with any will. Any capital gains must be reported and paid to the Government of Canada.
As Canada looks to the future they have a firm vision for Cryptocurrencies. Canada continues to strive in the world to be a fore-runner with the innovative technology that has brought Cryptocurrencies to light.