Canada blockchain working group to propose regulations

June 27, 2018
Chris Wheal

Canada’s capital markets regulator has formed a committee to recommend regulatory proposals to address the growing number of blockchain applications in its markets system.

Canada is forming its regulatory response to the growing influence of blockchain and crypto assets: Shutterstock

The Investment Industry Regulatory Organisation of Canada (IIROC), a not for profit self-regulatory body, issued a statement on Tuesday outlining its initiatives for the 2019 fiscal year. Among its principal strategies was to support industry transformation, under which it said it would “prepare to regulate blockchain applications and digital assets”.

Market ecosystem

The IIROC said that the potential application of blockchain technology was poised to dramatically alter the ecosystem that underpins capital markets.

“Digital assets such as cryptocurrencies are examples of blockchain applications that have already begun to impact the capital markets in significant ways, as potential direct or indirect investments, or in the form of initial coin offerings (ICOs) and cryptocurrency exchanges.”

Working group

It added it had formed a working group to help it keep pace with the fast-evolving sector that would build on the IIROC’s knowledge to recommend a potential regulatory response.

“The impact of this phenomenon cuts across all boundaries, so the working group will liaise closely with other Canadian regulators and stakeholders, to ensure we are aligned and consistent,” the statement said.

Anti-money laundering rules

Canada’s Department of Finance published earlier this month published amendments to its regulations that address anti-money laundering and terrorism financing regulations to adapt to the influence of virtual currencies.

Those dealing in activities the include virtual currency exhcange services and value transfer services would need to implement a full compliance programme and register with Fintrac – the Financial Transactions and Reports Analysis Centre of Canada.

It added that all entities that receive $10,000 or more in virtual currency would have record-keeping and reporting obligations.

“These amendments serve to mitigate the money laundering and terrorist activity financing vulnerabilities of virtual currency in a way that is consistent with the existing legal framework, while not unduly hindering innovation,” the statement said.

Swiss response

 

 

Swiss banks to make it easier for blockchain companies to open accounts: Shutterstock

Meanwhile, in Switzerland a working group has been created by the Swiss Bankers Association to create a working group to help blockchain companies open bank accounts.

Thus far, the country’s banks have been reluctant to offer accounts to blockchain companies due their close association with cryptocurrency transactions and the country’s market regulations on money laundering.

Earlier in June, Hypothekarbank Lenzburg became the first in the country to offer full banking services to blockchain and crypto companies.

Florida appoints crypto chief

 

Florida to create a cryptocurrency chief: Shutterstock

And in Florida, the US sunshine state, chief financial officer Jimmy Patronis is to appoint a cryptocurrency chief to oversee the industry in the state.

The appointed officer will co-ordinate with the Office of Financial Regulation (OFR) and Office of Insurance Regulation (OIR) on the development of policy, legislation and regulation.

Initial coin offerings and crypto companies based in the state must register with the OFR will be supervised by the new crypto chief.

Patronis said: “We cannot allow the cryptocurrency industry to expand in Florida unfettered and unchecked with the potential for so many, including our large population of seniors, to be exploited.”

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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