Geek News: Latest Technology, Product Reviews, Gadgets and Tech Podcast News for Geeks

Canada Implements World’s First Law Regulating Bitcoin

Posted by JenThorpe at 6:09 PM on July 6, 2014

Bitcoin logoThe Parliament of Canada has approved the world’s first national Bitcoin law. It is the first official law that concerns the treatment of Bitcoin financial transactions under national anti-money laundering law.

Bill C-31 was an amendment to Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). In other words, the bill amended, or made a change to, an existing Canadian anti-money laundering law. Here are some key points of the law:

Regulates Bitcoin as an MSB (money services business): “Bitcoin dealing, more specifically referred to as ‘dealing in virtual currencies’ in Bill C-31, will be subject to the record keeping, verification procedures, suspicious transaction reporting and registration requirements under the PCMLTFA as a money services business.”

Does not define “dealing in virtual currencies”: “The phrase ‘dealing in virtual currencies’ was left undefined and it is not known what the defined term will encompass in terms of business activities once defined by regulation.”

Registration with FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada): “Bitcoin dealers will be required to register with FINTRAC and if successfully registered, to implement a complete anti-money laundering compliance regime.”

Captures foreign Bitcoin companies targeting Canada: In short, the bill extends to entities that have a place of business in Canada and also to entities that have a place of business outside Canada (but who direct services at persons in Canada).

Prohibits banks from opening accounts for Bitcoin entities if unregistered: “Under Bill C-31, banks will be prohibited from opening and maintaining correspondent banking relationships with Bitcoin dealers that are not registered with FINTRAC.”

Another key point to understand is that Canada’s Governor General gave Royal Assent to Bill C-31. Under Canadian law, that on it’s own does not necessarily mean that the bill instantaneously goes into force. Certain parts of the bill come in force on dates that were set in the bill. Other portions will come in force on a date determined by the Governor General.