On June 14, 2014, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Act) was amended to expand the definition of a money service business to include “virtual currency dealers”.  However, in order for the amendment to become operative, further regulations are required to provide more specifics about the types of entities that will be regulated as virtual currency dealers and how those entities will be regulated.  The use of the word “dealer” to describe the entities that will be regulated suggests that regulation will be directed at what has come to be referred to as “exchanges”, those entities that assist individuals and businesses to exchange fiat currencies for virtual currencies.  However, the amendments to the Act provide for regulations to be made that will provide a more detailed definition of a virtual currency dealer.  Until those regulations are made public, it is not possible to know for certain the types of businesses that will be captured by the regulatory net.  Further, regulations are needed to clarify whether virtual currecy dealers will be subject to the exact same requirements as money services businesses or whether new requirements particular to virtual currency dealers will be devised. 

In this regard, on July 30th, FINTRAC issued a press release clarifying that there was no expectation that virtual currency dealers would register with FINTRAC until the regulations come into force.  The release also stated that individuals or businesses that use virtual currencies for buying and selling goods and services would not be covered by the regulations, confirming that it is the exchanges that will be the subject of this round of regulation. 

For a link to the FINTRAC press release, click here.