In an article published on May 30, 2018 titled “Canadian Crypto Exchanges Push for Greater Regulatory Clarity”, it’s reported that a number of Canadian crypto exchanges are looking for greater clarity regarding regulatory compliance obligations. Some of them have already taken the initiative to report to the Financial Transactions and Reports Analysis Centre of Canada (Fintrac) ahead of it being mandatory to do so.

While regulations have already been set out, it’s not traditionally been apparent where crypto exchanges fall in the grand scheme of things which leads to greater uncertainty around their reporting obligations.

In just a short time it seems that the push for greater regulatory clarity was heard by the powers that be, as it was reported on June 10, 2018 that an official draft of new regulations has been released. The new draft seeks to strengthen Canada’s Anti-Money Laundering and Anti-Terrorist-Financing Regime (AML/ATF), and will treat crypto exchanges (and payment processors) as money services businesses (MSBs). This means that crypto exchanges will be required to report large transactions (over $10,000 CAD), as well as a new threshold being set for Know Your Customer (KYC) on transactions of $1,000 CAD or more.

As regulations will be imposed sooner rather than later, it makes sense for crypto exchanges to begin building internal KYC programs prior to mandatory reporting. When undertaking such a large change to the way a company does business, it’s always better to have additional time to implement said changes as it allows all working parts to come together to fine-tune the details with little disruption to the current workflow and process.

Implementing a full KYC regime can be tedious, not to mention the amount of manual paperwork that comes with ensuring due diligence has been done prior to onboarding a new client. Luckily as the world continues toward fully digital experiences, financial and regulatory technology (fintech and regtech) companies are working hard behind the scenes to create products which help to streamline KYC and customer due diligence. Securefact offers non-face-to-face identity verification solutions, allowing companies to digitally onboard both individual and business customers while satisfying regulatory requirements.

Ultimately crypto exchanges in Canada will be subjected to regulatory guidelines, and it’s only a matter of time before the rest of the world follows suit; the question to ask yourself is, “Are we prepared to meet our regulatory obligations while maintaining our operations, and our customer experience?”