Canadian Parliament Finance Committee Recommends 3 Ways To Regulate Cryptocurrencies
Canadian online news outlet iPolitics reported on November 14, 2018, that the country’s House Finance Committee recommended developing regulations to prevent money laundering through cryptocurrencies.
Regulate through a five-year crime fighting plan
Every five years, at least one parliamentary committee issues a new Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), and this committee wants to include crypto regulations in the next one.
The body started the review of the new act in February and has held 18 meetings since then, attended by more than 70 financial experts.
Through their thorough examination of the issue, the committee has recommended three ways for the government to regulate cryptocurrency business in order to reduce malpractices.
1. Command control over the fiat to crypto exchanges and to regard them as money-service businesses. Since entities running such services are under a strict set of regulations imposed through the PCMLTFA, it would ensure that those crucial transactions are conducted in accordance with the law.
Being in unison with the Canadian Department of Finance’s amendments from June this year, this recommendation is most probable to get implemented.
2. Describing their second position towards the to-be regulatory framework, the committee cited the financial adviser IJW & Co., and Durand Morisseau LLP law firm, who had assembled a 56-pages long explanation of their stance, along with the example of BitLicense implemented by the state of New York.
The second suggestion brings the attention to the fact that the current absence of regulations enables certain individuals to conduct large cryptocurrency cross-border transactions without the minimal degree of governments oversight. According to some quoted testimonials, cryptocurrency exchanges would best function in accordance with the law if a government’s license was required for them to operate.
“Regulating [exchanges of fiat currencies for cryptocurrencies] would address the [anti-money-laundering] concerns of the cryptocurrency space,” the committee concluded their second recommendation.
3. As a third problem, the House Finance Committee sees the lack of government’s insight into the cryptocurrency wallets. The committee explains that a higher level of scrutiny practiced over crypto wallets would enable the country’s financial watchdog to track suspicious transactions, and the police to tackle any form of a financial crime connected with cryptocurrencies.
The world is regulating, but to what end?
Every day, more and more countries around the globe devise new regulations for cryptocurrencies. In Europe, countries like Malta, Liechtenstein, and Switzerland compete on which one will have a more favorable set of laws for crypto businesses.
France doesn’t fall far behind with their progressive Plan d’Action pour la Croissance et la Transformation des Entreprises (PACTE), supported by the famous minister of finance, Le Maire. As reported by XBT.net, France is looking to cut taxes on cryptocurrencies.
However, it seems that Canada is on the verge to take an alternate route, following their southern neighbors. The U.S. began to implement the already existing set of securities laws on cryptocurrencies, resulting in more than a handful cease and desist orders for ICOs, followed by hefty fines.
The example of China shows best what happens when the government interferes with the free market in order to exercise a level of control, which many think is too extreme.
Still, these are only suggestions made by the House Finance Committee. Now, the ball is in the Canadian House of Commons’ court, which has 120 days to respond to this opinion. We will see what the future holds for cryptocurrency business in Canada only thereafter.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your own research and/or consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.