Canada eyes new crypto regulations for exchanges and payment processors
The Canada Gazette reported two days ago that Canada has published a draft of possible regulations that would provide further definition of cryptocurrency exchanges and payment processors. The guidelines come following suggestions made by the Financial Action Task Force (FATF), which identified a “number of deficiencies” during an evaluation of the country from 2015 to 2016. The FATF primarily targeted Anti-Money Laundering (AML) and Anti-Terrorist Financing (ATF) practices by organizations in the country.
According to the draft, cryptocurrency exchanges and crypto payment processors should be defined as money service businesses. They would, then, be obligated to report large transactions that amount to $7,700 (CAD$10,000) or more, and would also be held to new Know Your Customer (KYC) standards that require reporting of transactions worth $770 (CAD$1,000) or more.
According to the FATF study and the resulting regulations, the new guidelines would come at a price. The draft indicates that the guidelines would cost the industry approximately $47 million over a decade.
Francis Pouliot, co-founder of the Montreal-based Catallaxy blockchain consulting firm, was one of the first to show his dislike of the proposed regulations. He took to Twitter to say, "New requirement: ‘Large Virtual Currency Transaction Record’ means businesses required to ask for and keep details of every transaction over $10,000, like large-cash transaction reports. That's going to be extremely difficult and invasive to implement. I will object to this.”
The FATF is an agency spanning 37 countries and creates policies and regulations to combat money laundering. While it doesn't have any legal authority to implement changes, its recommendations are highly respected by participating members and they typically become law. According to the draft, “Canada’s AML/ATF Regime is largely consistent with international standards set by the FATF. Although the standards set by the FATF are not legally binding, as a member, Canada is obligated to implement them and to submit to a peer evaluation of their effective implementation.”