Canada Releases Official Draft of New Cryptocurrency Regulations
The government of Canada through its agencies working on crypto regulation have released an official draft on new regulations which will affect cryptocurrency exchanges and payment processors. The new draft has stated that the new rules are meant to address several deficiencies which were outlined by a report from the Financial Action Task Force after their evaluation in 2016. The new rules are also meant to equip the county’s Anti-money laundering and also looking at the Anti-Terrorism Financing Regime.
The draft also indicates that cryptocurrency exchanges and payment processors will be treated as money service business which will require exchanges to report large transactions especially sums over 10,000 dollars. The exchanges will also be required to adopt the system of know your customer threshold which has been set at 1000 Canadian dollars.
The draft has also talked about cost-benefit analysis which that the regulations will cost 61 Canadian dollars over the next 10 years. The draft has received different reactions with Francis Pouliot the founder of Catallaxy Blockchain consulting firm tweeting that: “Businesses are now required to ask for details and store the details of all transactions exceeding $ 10,000. This is very hard and offensive to apply and I will object it.”
The Financial Action Task Force is an intergovernmental organization which is responsible for the development of policies to reduce or end money laundering. The draft by the organization is not yet legally binding but according to the latest draft report Canada is thinking of implementing the regulations because it believes by implementing these regulations there will be a positive impact in the countries reputation worldwide as well as reducing criminal activities associated with Cryptocurrency.
The draft will however not be implemented without a fight from exchanges. The $10,000 limit is too low and also limiting for most of the exchanges given the fact that these exchanges receive transactions worth millions of dollars. More to that by keeping the records of people who transact a large amount of money means that such investors will not have confidence in these exchanges for giving authorities their financial information. Cryptocurrencies were meant to be decentralized and by sharing a customer’s information about their transactions means the centralized nature has already come in.
Regulating cryptocurrency markets has not been easy. However many experts have argued that regulating the sector would be very good especially for the long-term benefits of the cryptocurrency markets.