Despite the scandal involving Quadriga CX, it has become clear that Canada learned virtually nothing about cryptocurrency exchange regulations.
Canada Is Backtracking on Its Crypto Rules
As we all remember, the founder of the doomed exchange, Gerald Cotten, was pronounced dead in India during the latter half of 2018. Cotten was the only executive of the company that had access to the “digital keys” which would give users a clear path to the $190 million in crypto funds they had invested through the company’s platform.
Users then began to attack Cotten’s wife, hoping this would potentially produce a doorway to their money, but their efforts have proved fruitless. The company has recently filed bankruptcy and is entrapped in a class-action lawsuit brought forth by its many dissatisfied customers.
Quadriga CX is stationed in Canada, and despite being at the center of one of the largest cryptocurrency scandals in history, the nation is refusing to accept the reality of the situation and isn’t upping its exchange monitoring tactics. In fact, it appears to be lessening them.
The country’s government has announced that it is relaxing some of its current crypto regulations and requiring that exchanges only report transactions either equal to or above $10,000 CAD. That’s approximately $7,660 in USD. Crypto exchanges and payment providers have been fighting for the relaxation of these rules for some time, and now several companies are getting their way.
In addition, several of these exchanges will no longer be classified as crypto trading platforms but as money service businesses (MSBs). The government has released a statement explaining:
MSBs will now include domestic and foreign businesses that are dealing in virtual currency… As required of all MSBs, persons and entities dealing in virtual currencies would need to fulfill all obligations, including implementing a full compliance program and registering with FINTRAC.
FINTRAC is a federal institution that seeks to prevent money laundering and terrorist funding in Canada and abroad.
The statement went on to mention:
These amendments serve to mitigate the money laundering and terrorist activity financing vulnerabilities of virtual currency in a way that is consistent with the existing legal framework, while not unduly hindering innovation. For this reason, the amendments are targeted at persons or entities engaged in the business of dealing in virtual currencies, and not virtual currencies themselves.
What Will Happen to Crypto in Canada?
This new legislation could ultimately work for or against Canada. The downside is that there are now fewer regulations, which means that illicit crypto activity could become an even bigger norm within Canada’s borders.
At the same time, the country could potentially attract a lot more crypto-based business for itself thanks to its loosening regulations, which are likely to drive up its national economy. Countries with strict crypto regulations, like China and India, have seen many of their businesses disappear and move to “calmer” regions of Europe.
