Canada

Registration with FINTRAC (Money Service Businesses)

  The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit. Its mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities while ensuring the protection of personal information under its control. Steps Involved in the process of Registration: Step 1: Completion of  Pre-Registration Form Online   Step 2: Sign into MSB Registration System  Step 3: Complete and Submit MSB Registration Form Step 4: Approval or Disapproval Notice    Pre-Registration Form : The Registration Form must be duly filed with necessary details such as; Business structure  Name and Address Additional Information regarding Business Activities. Also, provide Contact details and ind...Read More

Regulation Of Crypto Currencies

    Cryptocurrencies are not considered a legal tender in Canada; as such legal tenders can only be in the form of banknotes and coins issued by the Bank of Canada as per the Currency Act, 1985. However, the Government of Canada permits the usage of cryptocurrencies in the form of digital currencies to buy goods and services on the internet and in stores that accept such digital currencies or to buy and sell digital currencies in open exchanges. TAXATION The Canadian tax laws and rules are applicable to the transactions of Digital Currency. The Canada Revenue Agency(CRA) characterizes cryptocurrency as a  commodity and not as a currency; hence, its usage to pay for goods and services is treated as a barter transaction. Payments: Digital currencies are subject to the Income Tax Ac...Read More

Canadian Securities Laws : Coins and Tokens

  The CSA Notice 46-307 addresses a number of considerations of relevance to Fintechs, investors and their advisors, including the potential applicability of Canadian securities laws to initial coin offerings (“ICOs”) and initial token offerings (“ITOs”), cryptocurrency exchanges and cryptocurrency investment funds. It follows a press release issued by the Ontario Securities Commission earlier this year confirming that Ontario securities laws may apply to any use of distributed ledger technologies (“DLTs”), such as blockchain, as part of financial products or service offerings.   Effect of status as a ‘SECURITY’ The CSA Notice clarifies that regardless of whether the instrument distributed is referred to as a coin/token generated from an ICO/ITO, instead of a share, stock or equi...Read More

CRYPTOCURRENCY OFFERINGS

  Cryptocurrency offerings can be in the form of initial coin offerings(ICO), initial token offerings(ITO) and sales of securities of cryptocurrency investment funds. These offerings provide new opportunities for businesses to raise capital and for investors to access a broader range of investments. However, they can also raise investor protection concerns, due to issues around volatility, transparency, valuation, custody, and liquidity, as well as the use of unregulated cryptocurrency exchanges. Investors may also be harmed by unethical practices or illegal schemes, and may not understand the properties of the investment products that they are purchasing. The Securities laws in Canada will apply if the person or company selling the securities is conducting business from within Canada...Read More

DIGITAL CURRENCY

Introduction On 25 March 2014, the Senate authorized the Standing Senate Committee on Banking, Trade, and Commerce (the Committee) to study digital currencies, with a particular focus on the potential risks, threats, and advantages of these electronic forms of exchange. The Committee’s interest in the topic was partially motivated by media reports about bitcoin being used to make and receive payments over the Internet, and comments by witnesses during our recent statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act about trends in the use of the Internet to launder money. While the focus of the Committee’s study was “digital currencies” in general, it was specifically about cryptocurrencies, which are digital currencies that rely on encryption; in particu...Read More

MARGIN REQUIREMENTS FOR CRYPTOCURRENCY FUTURE CONTRACTS

  With the launch of trading of cryptocurrency on certain futures exchange in December 2017, there is a need to clarify the minimum margin requirements for these future contracts for Dealer Member Inventory and client positions. As per Dealer Member Rule 100:8(f); the Investment Industry Regulatory Organisation of Canada (IIROC) may prescribe greater or lesser margin requirements than those prescribed or referred to in Rule 100.8 (Commodity Futures Contracts and Futures Contract options) with respect to any particular or kind of person or account. The IIROC prescribes greater margin requirements for cryptocurrency future contracts that trade on commodity futures exchanges than the margin requirements prescribed or referred to in Rule 100.8. For such exchange-traded cryptocurrency futu...Read More

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