Cryptocurrency exchanges in Canada will have to be registered with the local regulatory agency, the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC). This is according to a recent article published by the agency on July 10.
Exchanges In Canada Must Be Registered
The cryptocurrency market around the world continues to find new regulations and rules. Regulatory agencies in different countries are taking further measures to keep exchanges and other firms under control. This time, the Canadian watchdog is requesting exchanges to be registered with the Financial Transactions and Reports Analysis Centre, which is in charge of controlling the financial market.
This new requirement will be entering into effect alongside other regulations related to anti-money laundering (AML) regulations.
According to a report released by The Globe, these regulations and compliance policies were voluntary for companies operating in the market. However, they will now be mandatory for those that want to operate in the Canadian market. Exchanges will also have to follow Know Your Customer policies and also report suspicious transactions to the Canadian regulatory agency. Exchanges will also have to report suspicious transactions to local authorities in the country.
Lori Stein, a partner at the law firm Osler, Hoskin & Harcout, Canadian institutions have been concerned about terrorist financing using crypto exchanges.
On the matter, Stein added:
“The hope is that now that there is going to be a requirement to register and comply, and oversight by FinTRAC, that banks and other financial entities are going to be more open to providing services to and dealing with virtual-currency businesses.”
There are several exchanges that are currently controlling the transactions that take place on their platforms. There are blockchain analysis firms that follow the funds that move from and to the exchange in order to understand whether they were related to illegal activities in the past. This allows exchanges to understand whether there are criminals using the platform.
Nonetheless, these regulations imposed on crypto exchanges by regulatory agencies may also have negative effects on them. There are customers that do not want to reveal their information to exchanges and that want to transact in a more private way. This can also increase the number of transactions that are processed using wallets that are not linked to exchanges or that do not follow AML and ATF policies.