Canada introduces new regulations on Crypto industry
After Facebook announced its digital currency Libra, the lawmakers around the world started putting more effort into creating the regulations for this new type of property. January 16, 2020, Canadian Securities Administrator issued guidelines on laws on the crypto exchange. Anyone who is involved in the trade of crypto assets will have to follow the rules. The main things to consider for the platforms are the purpose and nature of their currencies and the delivery time.
Justin Trudeau is the biggest fan of cryptocurrencies in general. His main achievement, digital charter, devotes the biggest part to the crypto industry. Trudeau’s government believes that crypto is the future of money and everything will be digital in a decade. According to the library of congress, digital currencies (including Bitcoin and Ripple) are the subject of taxation. Crypto is not the official currency but the government allowed citizens to use it as a transaction. Unlike the countries of the EU and the US, Canada has a liberal approach to crypto, especially to Bitcoin. Trudeau’s team working on the economy used the BTC’s rise as the advantage back in 2017. BTC’s value had a massive rise and Canada gave the green light to local digital companies to use bitcoin as payment options.
iGaming industry was the first to use the Bitcoin and Ripple and it was a game-changer for the industry. The government gave local online casinos to implement Bitcoin payments not only for local but also for international players and it left out of the taxation system. iGaming industry has seen a massive rise due to BTC implementation. BTC casino platforms became very popular not only among Canadians but also among international players. Casino websites adapted all the games to BTC and doubled the attention of the global market. BTC has changed the iGaming space of Canada and it reflected on contribution to the economy of the country. Although the price of BTC is fluctuating, people have more trust in it as it’s a free system without any banking or governmental systems. Successful implementation into the online casino industry is the catalyst for the government’s decision to adopt other industries to crypto. So, new regulations will come for traditional business industries.
Regulating the online crypto exchange
Regulating cryptocurrency exchange is even more complicated because some platforms would be required to follow the rules and some wouldn’t. The ones that manage the funds of their clients or all centralized crypto exchanges that have Canadian customers will have to follow the rules. However, the non-custodial or decentralized exchanges wouldn’t be required to do so. The official document issued by CSA, Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets states: “Some Platforms are merely providing their users with a contractual right or claim to an underlying crypto asset, rather than immediately delivering the crypto asset to its users. In such cases, after considering all of the facts and circumstances, we have concluded that these Platforms are generally subject to securities legislation.” They provide some examples of when the securities legislation does and doesn’t apply in the same document.
Representatives of the crypto exchange industry have issues with the new guidance. Some of them say that the delivery of digital goods, such as tickets, movies, video game currency, is almost always delayed in time for multiple reasons, whether it’s to avoid money laundering or to make sure who the person purchasing the goods is. These laws may exclude Canadian clients from using the platforms that will be required to follow the new laws.
Law has to be improved to adequately respond to crypto trends
The cryptocurrencies can be used in more ways than the existing security laws cover. Cryptocurrencies are considered securities or financial assets that can be traded, therefore they should be brought under the security laws, say the regulators. “The evolving landscape of the industry prompts us to clarify our regulatory framework so as to better support fintech businesses seeking to offer innovative products, services, and applications in Canada.” said the CSA Chair, Louis Morisset. Cryptocurrencies are used in different ways and differentiating them according to their purpose became difficult when they became very popular in 2017.
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