Crypto Brokers in Canada

Many countries worldwide are currently defining their stand on cryptocurrencies and their affiliated trading services. Among these countries is Canada, whose government released an official draft that discussed the country’s stand on cryptocurrency brokers and payment methods linked to it.

The official draft was published in summer 2018, where the Canadian government discussed new regulations on crypto, as well as payment processors. The official draft was released through the Canada Gazette.

The new regulations stated in the draft addressed the issues pointed out by the FATF (Financial Action Task Force) in their 2015 and 2016 assessments. The purpose of new regulations was to create a stronger anti-terrorist financing and anti-money laundering laws of Canada.

Critical Stand in Crypto Trading

Under new regulations of FATF, virtual currency exchange is considered as a Money Service Business (MSB). As it was classified under MSB, all transactions exceeding CAD 10,000 must be reported.

Additionally, the “Know Your Customer” is limited to CAD 1,000. This translates to trading restriction of an amount larger than $1,000 unless the trader provides personal data such as full name, telephone number, current address, occupation, and birthdate.

Bitcoin Ownership

In December 2017, president of the Central Bank of Canada, Stephen S. Poloz, warned the people on purchasing Bitcoin and the uncertainties of cryptocurrencies in general.

In 2017, the percentage of Bitcoin owners jumped to 5% from 2.9% in 2016, proving that the cryptocurrency was gaining more popularity in Canada.

To see if the people viewed Bitcoin as a mere currency or an investment, the Canadian Central Bank conducted a 2-year study whose main objective was to understand the people’s view on bitcoins. The study aimed to evaluate how to use the crypto, how to accept it in the country’s financial system, as well as relevant knowledge on it.

Bitcoin Investment

The main motive that drove people to buy a Bitcoin has shifted in the past two years. In a survey, 29% of people wanted to own a Bitcoin in 2016 due to interest in acquiring new technology, 39% used it for payment transactions or remittances, while 12% primarily viewed Bitcoin as a form of investment. In 2016, possession of a Bitcoin was chiefly for technology and as a form of currency.

However, in the study done in 2017, it showed that only 8% remained interested in new technology, and 10% used it as payment for purchase and remittances. 58% viewed ownership of a Bitcoin as an investment. The shift in perception of Bitcoin and even cryptocurrencies, in general, can be associated with the skyrocketing price hikes as 2017 came to an end.

Canadian Banks on Bitcoin Trading Platforms

One of Canada’s largest banks, the Bank of Montreal, joined in other banks in restricting crypto buyers.

In April 2018, the internals of the BMO was leaked. The data was posted on Reddit, exposing data that BMO is restricting its clients from direct withdrawals via Mastercard and Interac Online Payment to strengthen the protection of customer privacy as well as the bank.

BMO is not alone in restricting purchases of crypto. Scotiabank and Toronto Dominion Bank have joined in blocking all purchases of cryptocurrencies via credit cards as it could potentially result in the client becoming too much in debt and without the capability to pay it.

Banks Accepting Crypto Trading

Aside from Canadian banks, other financial institutions have also taken action against the growing crypto industry. Among these actions taken include freezing clients’ accounts linked to crypto without any warning.

However, this solution proved to be unsuccessful. The restriction of Canadian banks led traders to look for other methods of purchasing Bitcoin, like forums and the site Localbitcoins. The website’s Canadian customers have ballooned up in only a few months.

Peer-to-peer stock exchange platforms, Bitcoin ATMs, and other credit unions are always accessible to transact crypto purchases. As cryptocurrency remains in demand, these services will still be within reach in the coming years.

Companies that mine Bitcoins have also hinted interest in locating in Canada due to low-cost electricity and a cool climate that keeps equipment cool.

Banks Accepting Crypto Trading

Not all banks and companies have done measures against cryptocurrencies, as some have chosen to capitalize on the rising popularity of the virtual currency. Companies like the TMX Group has been planning to develop its crypto-trading services.

On top of that, the Canadian government itself views Blockchain technology in a good light. In January 2018, the National Research Council Canada publicly announced testing Ethereum for the first time to be applied to transparent administration of government orders.

Also, Canada is looking to enforce a blockchain-based ID system called the Known Traveller Digital Identity (KDTI) with the help of the World Economy Forum.

The two systems are yet in the beginning phase of planning and testing, which means it might take a long time before these systems are completed to be launched to the Canadian people.

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