Feeds

Canadian regulators welcome US Bitcoin refugees with open arms

Money laundering not a problem here, eh

High performance access to file storage

Canadian Bitcoin traders will not be clobbered by laws similar to those being used to target virtual currency exchanges in America, according to a leaked letter from the country's financial investigations unit.

The Register has seen a letter from the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) which was sent to several prominent Bitcoin exchanges in the country, explaining they are exempt from strict money-laundering laws.

US police used similar laws to freeze the accounts of Mt. Gox, the world's largest Bitcoin exchange, last week after claiming it was operating as an "unlicensed money service business."

But in a letter to the Canadian exchanges, FINTRAC confirmed the exchanges were not actually money service businesses and were therefore exempt from laws governing this type of firm.

If America's crackdown on Bitcoin continues, Canada is likely to be seen as a safe haven if FINTRAC sticks with its current policy.

The boss of Canadian Bitcoin exchange Cadbitcoin, whose name we agreed to keep private, received one of the letters. He wants to open shops across Canada which will allow people to buy Bitcoin in person, but his accounts were shut down by banks concerned about virtual currency trading.

He predicted a Canadian Bitcoin bonanza on the back of the ruling, claiming that worried American investors would start cross-border trading to avoid US legislation.

The entrepreneur said: "This is a big win for Canadian exchanges, because US citizens can simply trade from across the border."

FINTRAC's letter went out to a number of Bitcoin exchanges in Canada, including LibertyBit, who were becoming nervous following developments in America.

The letter said: "Your entity is not, at this time, engaged as a money services business in Canada as per the Proceeds of Crime (Money Laundering) and Terrorist Financing and its associated Regulations.

"In fact, your entity doesn’t provide the services of remitting and/or transferring funds for the sake of the service. The transfer of funds is simply a corollary of your actual service of buying and selling virtual currency. Therefore, you do not have to register your entity with us."

However, Canadian banks have previously closed down accounts held by Bitcoin traders, claiming they fell foul of the money service business laws.

Bitcoin dealers in the US are currently very nervous after the Department of Homeland Security obtained a warrant last week allowing it to seize an account linked to Mt. Gox, a Tokyo-based exchange that claims to process about 80% of all Bitcoin transactions.

Enforcers swooped months after warning that online currency traders would be subject to the same rules as traditional financial operators like Western Union, who are legally compelled to tell cops about transactions worth more than $10,000 to help tackle money-laundering. ®

High performance access to file storage

More from The Register

next story
Android engineer: We DIDN'T copy Apple OR follow Samsung's orders
Veep testifies for Samsung during Apple patent trial
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
One year on: diplomatic fail as Chinese APT gangs get back to work
Mandiant says past 12 months shows Beijing won't call off its hackers
Don't let no-hire pact suit witnesses call Steve Jobs a bullyboy, plead Apple and Google
'Irrelevant' character evidence should be excluded – lawyers
EFF: Feds plan to put 52 MILLION FACES into recognition database
System would identify faces as part of biometrics collection
Big Content goes after Kim Dotcom
Six studios sling sueballs at dead download destination
Ex-Tony Blair adviser is new top boss at UK spy-hive GCHQ
Robert Hannigan to replace Sir Iain Lobban in the autumn
Alphadex fires back at British Gas with overcharging allegation
Brit colo outfit says it paid for 347KVA, has been charged for 1940KVA
Jack the RIPA: Blighty cops ignore law, retain innocents' comms data
Prime minister: Nothing to see here, go about your business
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.