As reported by Canada Gazette on June 9, the Canadian government has released an official draft of new regulations on crypto exchanges and payment processors.
The draft indicates that the new regulations seek to address a “number of deficiencies” that the Financial Action Task Force (FATF) outlined after their evaluation in 2015-16, namely in strengthening Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime (AML/ATF).
The new regulations will treat crypto exchanges and payment processors as money service businesses (MSB), which requires them to report large transactions, meaning those over $10,000 Canadian dollars ($7700 USD), and a new Know Your Customer (KYC) threshold set at transactions of $1000 CAD ($770 USD).
A cost-benefit analysis reveals that the regulations would cost about $61 CAD mln ($47 mln USD) over the next 10 years.
Francis Pouliot, co-founder of Montreal-based blockchain consulting firm Catallaxy, tweeted his response to the draft: “New requirement: “Large Virtual Currency Transaction Record” means businesses required to ask for and keep details of every transaction over $10,000, like large-cash transaction reports. That’s going to be extremely difficult and invasive to implement. I will object to this.”
In fact, the FATF is an intergovernmental organization that develops policies to combat money laundering. These policies are not legally binding, but according to the draft, Canada believes that implementing these regulations will have a positive impact on the country’s international reputation.