If you operate an exchange, bitcoin automated teller machine or any other money services operation that does business with Quebec residents, you will need to comply with its updated Money Services Businesses Act regardless of where in the world you are based.
This new policy document was first made public on February 1, 2015 (updated to March 1, 2015), and experts have been trying to determine what it means for bitcoin businesses both within Quebec and outside its borders.
The document says that anyone offering money services (that is, currency exchange; funds transfer; issue or redemption of traveler’s checks, money orders or bank drafts; check cashing; and operation of an automated teller machine) must be licensed by Quebec’s Autorité des marchés financiers (AMF), or the Authority of Financial Merchants, in order to do business with clients in Quebec.
For companies not based in Quebec, that means hiring a local representative in the province, usually a lawyer or law firm, to handle the paperwork and act on their behalf in any dealings with the AMF.
In a recent clarification email received by the Bitcoin Embassy on February 26, the AMF confirmed that certain digital currency businesses, such as exchanges (online or in person), need to possess a funds transmitter license to operate. But the details surrounding what type of business models are subject to this license category still needs further clarification, says Jillian Friedman, legal counsel for theBitcoin Embassy in Montreal.
The email also states that the new interpretation of the MSB law will take effect immediately: There is no grace period. The AMF representative said, however, that those businesses that submit requests for a license within a reasonable time and who cooperate with the AMF will normally be allowed to continue their business activities while their license request is being processed.
Amber Scott, founder and Chief AML Ninja at Outlier Solutions Inc. broke down the policy document in a recent Decentral Talk Live episode, as well as in a follow-up interview for Bitcoin Magazine. (Watch the full Decentral Talk Live episode on decentral.tv here.)
“There are no special circumstances for small businesses who might have one or two interactions with clients in Quebec,” she said. Scott said that companies who do business with Quebecois clients have two practical options at the moment: Register with the Quebec Autorité or stop doing business in the province. For online money services businesses, that would mean filtering and blocking all traffic originating from a Quebec IP address.
As for ensuring compliance, Scott expects that the AMF likely will begin by focusing on companies doing a significant amount of business in Quebec. Anyone found not to be registered would probably receive a letter requesting compliance with the policy, followed by further enforcement measures.
The Bitcoin Embassy in Montreal, home to its own bitcoin ATM, came out with the following response shortly after learning about the new policy statement:
“While we welcome the intention of the Province of Quebec’s financial regulator … to clarify the regulation of bitcoin ATMs, we are surprised by the lack of transparency and involvement of the Bitcoin community in this decision. However, this development had been expected by the community, and the Bitcoin Embassy views this decision as an implicit recognition that Bitcoin is indeed a legitimate monetary alternative to fiat currencies.”
The Bitcoin Embassy also expressed surprise that the AMF did not wait to see what regulations its federal counterpart, FINTRAC, is currently drafting. The Embassy statement noted that Quebec is now the only province that imposes these requirements on Bitcoin ATM operators.
Christie Harkin is the contributions editor at Bitcoin Magazine.