Similar to other “money service business” the law will now be applicable to dealers exchanges and ATMs.
Canada has become the first country to bring a legislation to regulate bitcoin by subjecting it to the same standard of rules and regulations applied to other forms of currencies.
Canada gave Royal Assent to Bill C-31, An Act to Implement Certain Provisions of the Budget Tabled in Parliament on February 11, 2014 and Other Measures.
As per the new law Bitcoin will be considered similar to a "money service business" and applies to dealers in virtual currencies, Bitcoin exchanges and ATMs.
Leading Canadian accounting and business consulting firms in Canada, MNP has welcomed the passage of the bill saying that the regulatory mechanism was long overdue.
MNP’s AML Services national leader Matthew McGuire said, "Canada has been like the ‘wild west’ when it comes to digital currency regulation,"
"This legislation is long overdue. There is a lot of work to be done to bring Bitcoin exchanges into compliance in the next few months," McGuire said.
After the legislation came into effect bitcoin exchanges will now have register themselves with FINTRAC, report suspicious and other transactions, keep certain records, and implement compliance plans.
The law will be applicable to Bitcoin companies that operate in Canada and outside as well as who direct services at persons or entities in Canada.
MNP senior financial crime advisor Christine Duhaime said, "This is intended for external Bitcoin companies doing business in Canada who will have to comply with Canada’s anti-money laundering legislation."
"Part of the concern with such laws is whether they strike a balance between combating financial crime and supporting innovative technology development."
"The concern is that venture capital for Bitcoin start-ups may dry up if legislative obligations prove to be too onerous or expensive. But this legislation is an important step forward."