Canadian Money Regulation May Prove a Warmer Climate for Bitcoin than the US

Canadian Money Regulation May Prove a Warmer Climate for Bitcoin than the US

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.

RELATED:  Bitcoin Weekly 2015 November 4: Bitcoin market boom nears $500, Bitcoin Unicode symbol coming, Taiwan declares Bitcoin illegal

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.

Kyt Dotson

Kyt Dotson

Kyt Dotson is a Senior Editor at SiliconAngle and works to cover beats surrounding DevOps, security, gaming, and cutting edge technology. Before joining SiliconAngle, Kyt worked as a software engineer starting at Motorola in Q&A to eventually settle at where he helped build a vast database for pet adoption and a lost and found system. Kyt is a published author who writes science fiction and fantasy works that incorporate ideas from modern-day technological innovation and explore the outcome of living with those technologies.
Kyt Dotson


Join our mailing list to receive the latest news and updates from our team.

1 Comment

  1. It’s hard to say what effect this will have on non-Canadians. The biggest Canadian exchange, Virtex, currently will deal only with Canadian citizens.
    The biggest problem for Canadian exchanges is not the government but the chartered banks, who have arbitrarily closed the accounts of several exchanges without reason or explanation.
    Virtex is down to just one chartered bank (BMO) for anonymous cash deposits after Royal and Scotia both bailed. They’re talking about adding several other options including Money Mart.
    They’re also talking about possible appeals to the ombudsman. The banks might not like Bitcoin but this could lead to a public relations nightmare with enough media attention.

Submit a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Share This

Share This

Share this post with your friends!