A leaked letter from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has come to the attention of The Register that shows that citizens of the United States’s northern neighbor may enjoy less regulations on bitcoin trading. In the wake of US authorities seizing the Dwolla account of Mt. Gox using money laundering regulations as the basis for the seizure there has been concerns about how exchanges that trade in the currency may be treated in the future.
FINTRAC’s letter went out to numerous Canadian Bitcoin exchanges and explains that they are not considered to be “money services businesses” and therefore would be exempt from regulations involving the transmission of money or money laundering laws in the strictest sense.
Quoted in the article the letter states: “Your entity is not, at this time, engaged as a money services business in Canada as per the Proceeds of Crime (Money Laundering) and Terrorist Financing and its associated Regulations.
“In fact, your entity doesn’t provide the services of remitting and/or transferring funds for the sake of the service. The transfer of funds is simply a corollary of your actual service of buying and selling virtual currency. Therefore, you do not have to register your entity with us.”
This letter comes to relieve concerns of Bitcoin traders in Canada as banks in that country have previously shut down accounts held by them, claiming the practice fell afoul of money service business laws.
Amid the businesses in receipt of the FINTRAC letter was LibertyBit–a Canadian Bitcoin exchange–and other exchanges that have become concerned about the increasingly chilly apparent condition in the United States. While the US Department of the Treasury (via FinCEN) appear to show that BTC trading is legal and has little concerns from them as to regulation. However, the recent act by the State Department and DHS against Mt. Gox has generated a lot of wariness about the climate for BTC trading in the US.
As Mt. Gox represents 80% of the total BTC exchange trade volume, the seizure of Gox’s Dwolla account sends a striking message to the community.
The only source for information on this FINTRAC letter currently is LibertyBit and The Register, but if this proves authentic, it’s a sign that the Canadian government may be a less hostile place for BTC traders than the US and that could mean more exchanges (and traders) might go to Canada for their Bitcoin needs than the US.