Quebec’s securities regulator is calling on firms that operate trading platforms or automated teller machines (ATMs) for virtual currencies, such as bitcoins, to register.
The Autorité des marchés financiers (AMF) said Thursday that, in Quebec, businesses operating an ATM or a platform for trading virtual currency must first obtain a licence under legislation governing money services businesses.
To that end, the AMF published amendments to reflect the licensing framework set up under that legislation.
The licensing regime, which came into effect in April 2012, requires businesses that provide money services — such as currency exchange, fund transfers, cheque cashing, and operating ATMs, among other functions — to obtain a licence. It also requires that these businesses to provide certain information to the regulator, including information about the directors, officers and partners of the business, and its lenders.
The AMF says that it analyzes these applications and issues licences to “businesses that show that they have the required integrity and good moral character.” It also conducts background checks through the Sûreté du Québec and municipal police forces to determine whether an applicant meets the requirements.
The legislation also imposes various obligations on these firms, including record-keeping, and that they verify the identity of their customers. A business that contravenes these obligations or commits other violations can be fined or have its licence revoked.
Notwithstanding this obligation to be licensed, the AMF stresses that its supervision of these businesses does not mean that it regulates virtual currencies. “The fact that a business holds a licence issued by the AMF does not protect consumers from the risks associated with virtual currency, in particular volatility and liquidity risks,” it says.
Additionally, it notes that transactions involving virtual currency are not covered by the province’s compensation fund or deposit insurance. The AMF also points out that “the anonymity of virtual currency transactions and their relatively low costs may enable fraudulent investment schemes, or transactions; which may involve online offerings or trading platforms not authorized by the AMF.