Why Do You Need a Canada Crypto Exchange License?

Canada was one of the first countries to acknowledge the potential of cryptocurrencies and their growing weight in financial transactions.

23:28 14 August 2024

Canada was one of the first countries to acknowledge the potential of cryptocurrencies and their growing weight in financial transactions. The rapid development of the crypto infrastructure and the growth of the crypto market stimulated the government to regulate it. As one of the first steps, the government adopted several legal acts that defined the rules for obtaining a Canada crypto exchange license.

What License Do You Need for a Crypto Exchange in Canada?

The activities of cryptocurrency service providers in Canada are regulated by laws related to the Money Services Business. This class of business includes all companies that, while not being banks, provide financial services to the population, businesses, and organizations. Regardless of whether you are going to provide fiat or crypto transactions, you need to obtain a license:

• MSB (Money Services Business) license if you want to conduct a local crypto business in Canada;

• FMSB (Foreign Money Service Business) license if you want to offer your services as a foreign company.

To obtain any of these licenses, you need to apply to the Financial Intelligence Unit of Canada (FINTRAC) and obtain permission to conduct eligible crypto businesses. If you have questions, Fintech Harbor Consulting LTD will help you collect all the necessary documents and meet all the regulator’s requirements. With the help of the company's experienced lawyers, you will go through the authorization process as a crypto service provider and start your crypto business easily.

What Makes Canada Attractive to Obtaining a Crypto Exchange License?

The popularity of crypto trading makes cryptocurrency exchanges an attractive type of business. The features of Canadian jurisdiction add a few more arguments in favor of opening a crypto exchange there:

• The regulator is loyal to issuing MSB licenses. Canadian authorities will not create artificial obstacles for opening a crypto business. On the contrary, their requirements are more lenient than in other jurisdictions.

• The regulator will not require crypto businesses to pay registration fees.

• There is no requirement for the minimum size of the company's authorized capital.

Other Requirements for Crypto Exchanges in Canada

Having received an MSB license, you must adhere to all the requirements set by the regulator:

• Conduct transparent and accountable business, not hiding your assets;

• Keep full records of your business activities;

• Pay all taxes in full;

• Comply with “Know Your Customer (KYC)” procedures;

• Adhere to anti-money laundering (AML) legislation;

• Renew your MSB license every two years.

You cannot avoid obtaining an MSB license and registering a crypto exchange with FINTRAC if you want to run an eligible business in Canada. When opening a business account in a Canadian bank, you will need to provide confirmation of your registration and license. Therefore, you need to act in accordance with all the regulator’s requirements from the very beginning. Consult with Fintech Harbor Consulting LTD concerning the full set of documents and stages of obtaining a license. By complying with all licensing and registration requirements, you will get a great start for your business.