The Autorité des marchés financiers (AMF), Quebec’s financial services regulator, has taken another step towards regulating virtual currencies such as Bitcoin.  On February 12th, the AMF announced that it had amended its Policy Statement to the Money-Services Businesses Act (the Act) to provide that operators of automated teller machines (ATM) that allow for the purchase of a virtual currency with cash must hold a license issued by the AMF.

While the AMF was quick to point out that it does not regulate the virtual currencies themselves, it did note that it only issues licenses to businesses that show that they have the required integrity and good moral character.  The AMF also pointed out that businesses that are licensed under the Act have various obligations, including record-keeping and verification of the identity of their customers.

The Regulations made under the Act provide that the identity of a customer must be obtained if the customer engages in one of four specified transactions, mostly once the transaction exceeds a specified monetary value.  The list does not currently include withdrawals from an ATM.  The AMF did not indicate whether it intends to seek an amendment to the identification requirements  of the Regulation to address the purchase of virtual currencies through ATMs.

There are amendments to the federal Proceeds of Crime (Money Laundering) and Terrorist Financing Act pending that will require that dealers in virtual currencies register under that Act.  However, further regulations are required to identify what types of activities will be considered to be dealing in a virtual currency.  We will have to wait and see if the federal law will be directed at the operators of ATMs or whether an attempt will be made to capture persons who provide the virtual currencies to the ATM network, assuming that they are not one and the same.

For a link to the AMF’s announcement, click here.