Many crypto startups prioritize the USA in their lists of business destinations, omitting unjustifiably Canada. The latter is not a less developed jurisdiction that adheres to the highest standards of doing business. Still, it remains more flexible and open to new business ideas.
If you are looking for a good business hub for your crypto business, getting a crypto license in Canada may be quite reasonable. Canada holds 6th place in the list of the best countries for doing business. The USA holds the 17th place, by the way. There are many things to think about, aren’t there?
What Makes Canada a Good Business Hub for Cryptos?
There are many reasons in favor of Canada as a business destination for crypto business:
- transparent business environment open to innovations
- developed economy and financial markets
- clear and predictable regulations
- robust infrastructure
- numerous opportunities to raise capital
- reliable banking system
- high ethical standards of doing business
- effective protection of the investors’ rights
How the Crypto Market Is Regulated in Canada?
Cryptocurrencies are absolutely legal in Canada and were recognized in commercial circulation in late 2013! However, the cryptos are not equal to other means of money, like USD, CAD, or EUR. Any cryptocurrency is deemed to be a means of exchange. When cryptos are used for paying for goods or services, from a legal standpoint, these are barter transactions.
There are two major authorities in charge of the crypto regulation in Canada – the Canadian Securities Commission (CSA) and the Financial Intelligence Service of Canada (FINTRAC). The latter registers companies as Money Service Businesses (MSBs). The CSA comes on the scene when cryptocurrencies are regulated under the provisions of securities laws. Distinguishing these two cases may be complicated sometimes. Professional lawyers help to spread the light on this tough question.
Financial Activities Subject to Licensing
In the case of Canada, we refer to a “license” conditionally. This is more of an authorization by nature than a license in its classical meaning. For this purpose, a company may register itself as an MSB. This authorization will allow to carry out one or more types of transactions:
- Deals with cryptocurrencies – this authorization allows the exchange operations with different cryptos and/or fiat currencies.
- Foreign exchange deals – they envisage the exchanges of different fiat currencies.
- Transfer and remittance operations – these deals are related to the transfer of funds from one entity to another by electronic means.
- Issuing or redeeming money orders (vouchers or cheques, for instance).
- Crowdfunding platform services.
In Canada, it is possible to get the authorization even for all of these 5 activities together! The regulations are very flexible in these terms.
What Do You Need for a Crypto License in Canada?
The process of getting the crypto authorization(s) is quite simple and straightforward:
- Elaborate on a business plan detailing the nature and scope of your business.
- Find a director and officers responsible for running a future business. You will basically need one director and one compliance officer. The requirements for their residency are absent. The company’s officials should only have impeccable reputations, sufficient experiences, and no criminal records. Carrying out interviews with state officers is often required.
- Register a Canadian legal entity, one shareholder is enough.
- Reserve technical equipment necessary for carrying out designated operations with the cryptos.
- Collect information about the founders and managers of a crypto company.
- Elaborate on sufficient AML/KYC, data protection, and cyber security policies.
- Complete applications and pay necessary fees.
- Submit the application documents and obtain a confirmation of the registration.
- Ensure tax registration and further tax filing.
How Long Does It Take to Get a Crypto License?
It typically takes around 3-4 weeks to collect all the documents needed for filing. However, more complicated business ideas will require more time to prepare the applicable policies.
The package for filing has to be submitted through the MSB Registration System. The FINTRAC usually responds within 2 weeks after receiving the application. Providing additional documents may be required, depending on the case background.
What the Level of Bureaucracy and Other Pitfalls Are?
The registration process is generally straightforward and is not bureaucratic. However, there are numerous aspects to keep in mind:
- Trademark – in the highly competitive crypto market, especially in the USA and Canada, it is strongly recommended to register a trademark to promote and protect a brand. As a minimal measure, it is advisable to operate from the .ca domain.
- Customer protection – Canada prioritizes the rights and interests of consumers above all. This means that crypto companies have to inform customers about the nature of services and associated risks. The information provided publicly should not be ambiguous at any point.
- Advertising – primarily, bright and flashy promotional materials should not mislead the customers about the nature of the offered products. However, high compliance standards make it a bit difficult to gain a competitive advantage in a pretty dense market.
If you want to address these or any other raising issues, request qualified legal assistance. Professional crypto lawyers are ready to apply their best experiences to benefit your business and foster its growth in Canada.
Give Canada a Priority as Your Business Destination!
Starting a crypto business in Canada is a promising endeavor. It is easy to benefit from, provided that you follow all of the applicable rules and standards. The latter are not bureaucratic and are reasonable in nature.
Canadian legal regulations are aimed at maximizing transparency and ensuring straightforward business operations at the same time. Qualified legal advisors are ready to help you with navigating effectively all of the local rules to make them work for your business in the end.
