Crypto Business License in Canada
Cryptocurrency License for Canada permits the utilization of digital currencies, including cryptographic forms of money In any case, digital forms of money are not viewed as legitimate tender in Canada. Canada's tax laws and guidelines, including the Income Tax Act, additionally apply to crypto currency exchanges.
Under the regulations of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), companies that provide cryptocurrency exchange or cryptocurrency transfer services will be required to procure a Money Services Business (MSB) license in Canada. Both Canadian and foreign cryptocurrency companies that operate in Canada must register as a Money Services Business with FINTRAC and comply with FINTRAC reporting requirements.
Cryptocurrency regulations to take note of before you set up cryptocurrency company in Canada
The FINTRAC is Canada’s official financial intelligence unit (FIU) committed to overseeing the detection, prevention and deterrence of money laundering and the financing of terrorist activities, while at the same time ensuring that personal information is safeguarded.
As of June 2020, all cryptocurrency exchanges and companies that deal with virtual currency in Canada must register with the FINTRAC as a Money Services Business (MSB).
A company is considered to be dealing with virtual currency if it provides the following services:
Virtual currency exchanging services which include exchanging fiat money for virtual currency; virtual currency for fiat money; and virtual currency for another virtual currency.
Virtual currency transfer services which include transferring virtual currency on behalf of a client or receiving virtual currency for remittance to a beneficiary.
The requirement to register as a Money Services Business also applies to foreign cryptocurrency exchanges that direct their services for Canadian clients.
Hence, it is now mandatory for all cryptocurrency companies in Canada to adhere strictly to the requirements of a Canada Money Services Business which includes the implementation of a compliance program, appointment of a compliance officer and maintaining records of clients and transactions.
As of 2021, cryptocurrency companies are also required to comply with the Travel Rule which mandates that every Money Services Businesses must keep a record of all cross-border electronic fund transfers, including cryptocurrency transactions.
Why choose to set up a cryptocurrency company in Canada?
There are multiple benefits to setting up a cryptocurrency company in Canada.
Strong banking sector
Canada’s banking sector is dominated by 6 large banks and is widely regarded to have one of the safest banking systems in the world.
Not only do these large banks provide the necessary credit and liquidity required by businesses, they also have a strong capital buffer and a range of diversified assets to ensure that they are able to fund loans and saving accounts even during times of crisis.
Due to the strong regulations, the Canada banking sector managed to avoid the banking crisis that hit the US and many other European nations in 2008.
No cash deposit requirement
Unlike many countries which require a minimum initial capital to apply for a license to deal with electronic money or virtual currencies, there is no minimum cash deposit requirement for a Canada cryptocurrency company.
Thriving fintech industry
The adoption of fintech has increased by more than 50% in the last 5 years.
The country’s comprehensive banking system has facilitated the rise in the use of fintech technology in Canada. Since Canada is dominated by several large banks, there is a high level of consumer trust in these big banks. When fintech start-ups collaborate with banks, they can gain access to the bank’s large client base, and this will allow them to build their own reputability.