Bitcoin Legislation Arrives in Canada and California
In widely anticipated legislation on Bitcoin, Canada is regulating digital currency businesses under existing rules for money movement and California is updating its laws to legalize the use of alternative currencies.
Canada will regulate Bitcoin businesses as money services businesses (MSBs), similar to the U.S. Before this, Canada's Financial Transactions and Reports Analysis Centre (Fintrac, comparable to Fincen in the U.S.) was rejecting applications of Bitcoin businesses applying as MSBs.
The new legislation means that cryptocurrency businesses do need to register with Fintrac and keep up anti-money laundering reporting programs. The legislation also prohibits Canadian banks from opening accounts with Bitcoin businesses that are unregistered.
"Canada has been like the 'wild west' when it comes to digital currency regulation," says Matthew McGuire, national leader of AML Services with MNP LLP, an accounting and consulting firm in Canada, in a June 24 press release. "This legislation is long overdue. There is a lot of work to be done to bring Bitcoin exchanges into compliance in the next few months."
In related news, California updated its definition of lawful money.
Lawmakers in California have approved an update to state law, clarifying how the state sees alternative payment methods such as Bitcoin. The update will repeal the restriction that citizens must use only U.S. currency.
"In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives," says Roger Dickinson, a Democratic assemblyman for Sacramento, in a June 4 press release. "This bill is intended to fine-tune current law to address Californians' payment habits in the mobile and digital fields."
Bitcoin was specifically mentioned in the release.
The bill, reports Reuters, will now go to Jerry Brown, California's Governor, for approval or veto.
Last year, California sent a cease and desist letter to the Bitcoin Foundation, a trade group involved in education and evangelizing, in a misdirected attempt to crack down on cryptocurrency. Since then, several states, including California and New York, have sought to modify their regulations to encourage the use of Bitcoin and other digital currencies.