“Well thanks, Canada,” says the CEO of IOHK, the owner of the product Cardano [ADA] as he came across the news stating that the Canadian government has declared cryptocurrency businesses to be regulated. As per the Canadian government’s new move, all businesses that are involved in digital currency dealing will now be regulated as Money Services Businesses [MSBs].
The regulatory framework has been the topic of discussion in the cryptocurrency market for a very long time now, not restricted to any region around the world. As per the new law, Canada’s financial ecosystem will be safeguarded from Anti-Money Laundering and Anti-Terrorist Financing [AML/ATF] activities which have been the wish of the government.
When seen on the whole, Canada is the first amongst the other countries to officially state how cryptocurrency-related businesses will be regulated and if they need to be regulated at all. Canadian government saw the need to address a number of deficiencies including the above mentioned serious regimes and made the required amendments.
The official release document from Canadian government described:
“The proposed amendments to the regulations would strengthen Canada’s AML/ATF Regime by updating customer due diligence requirements and beneficial ownership reporting requirements; regulating businesses dealing in virtual currency; updating the schedules to the regulations; including foreign money service businesses (MSB) in Canada’s AML/ATF Regime; clarifying a number of existing requirements; and making minor technical amendments.”
According to their release, the result of the proposed amendments would be in a total unauthorized admin cost increase on businesses which estimated to around $463,098. It would also have a nationwide impact of $1 million or more including small businesses.
The evolving financial services are definitely influenced by digital currencies, especially decentralized digital payment systems that operate beyond the traditional financial system. These virtual currencies can be centralized or decentralized and additionally convertible or non-convertible depending on whether they can be exchanged for funds.
They clearly mentioned as they stated:
“Convertible virtual currencies are vulnerable to abuse for money laundering and terrorist activity financing purposes because they allow greater levels of anonymity, or in some cases complete anonymity, when compared to traditional non-cash payment methods. Virtual currencies can be accessed globally via online or mobile systems. They allow for the rapid transfer of funds within or across borders, oftentimes without any intermediary, are generally characterized by non-face-to-face customer relationships and can circumvent the physical “brick and mortar” financial system entirely.”
“Due to these characteristics, virtual currencies are increasingly being used to facilitate fraud and cybercrime, and to purchase illicit goods and services on the dark Web.”
The new payment methods and the Internet has made way for foreign entities to offer MSB services in Canada without a business place. These possess risks of being exploited and the current AML/AFT framework was not enough to capture these online and non-traditional methods, representing a legal gap in Canada’s legal framework. This has also allowed an uneven playing field for Canadian domestic competitors who must abide by the Act.
This is a general regulation implying to all cryptocurrency related businesses but Cardano had special attention amongst the market speculators since Charles posted about it,
“This was expected at some point … how does it impact Cardano’s adoption strategy?”
“Mr. @IOHK_Charles, how do you see this decision impacting the future of Cardano, especially if other countries follow their lead? Will this impeded development or cause undo regulatory burden? Thank you.”