We just arrived into the summer and a country is already making the first big step in the direction of regulation cryptocurrencies and related businesses. Canada’s Department of Finance just released a statement explaining how the county is planning to deal with the new and ever evolving industry of Digital Assets.

Sadly the statement concludes that businesses who deal with cryptocurrencies will be regulated as MSBs or Money Serving Businesses. Money serving businesses are those, which deal with and handle money, but are not officially recognized as banks. These include foreign exchange services and money transfer services.

The publication argues that these new Digital Assets could possibly be used for money laundering and terrorism financing activities, thus they come under the relevant regulatory category. The reasons given are the (pseudo)anonymous nature of these currencies and because these are not connected to bank accounts. Companies falling under FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) will also require to have KYC (Known-Your-Customer) and AML (Anti-Money Laundering) procedures in place. This means that those who wish to deal with these businesses will be closely monitored and data regarding suspicious users will be forwarded to the authorities in case it is requested.

Overall we are neutral with the decision, we expected a strict outcome considering Canada has close ties to the US economically. Next up we will have the Russian and G20 regulatory meetings in July with the hopefully final decisions.