Canadian regulators welcome US Bitcoin refugees with open arms
Money laundering not a problem here, eh
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. ®