Support in obtaining an MSB (Money Services Business) license in Canada to run a money services business.
As of March 2021, in a public notice by the CSA and IIROC (Canadian Investment Regulatory Organization), Canada has asserted its position in regulating cryptocurrency activity. The government sector ensures that all cryptocurrency exchanges and companies comply with the regulations.
Every entrepreneur must register a company with the Financial Transaction Analysis Center of Canada (FinTRAC). The securities legislation must also apply to cryptocurrency transactions.
The use of virtual currency is not prohibited in Canada, but it is not considered legal tender. Transactions with cryptocurrency are allowed, but it is not possible to pay for state fees, taxes, and charges. The IRS has defined cryptocurrency as a commodity, which acts as a barter transaction in exchange for other goods.
This activity is governed by basic legal rules:
AML/CFT Act (PCMLTFA Act).
Virtual work companies qualify as Money Service Businesses (MSBs). The Act also applies to exchanges operating outside the country and providing services to individuals and entities in the country.
The Securities Act.
In August 2017, the Canadian Securities Administrators (CSA) passed the CSA Staff Notice 46-307 Cryptocurrency Offerings Act, which regulates the licensing of virtual currency exchanges and transactions.
In addition, virtual currencies are subject to the Canadian provincial Securities Acts:
Bank of Canada's Blockchain Project.
Regulates international payments that use DLT technology.
If you want to open a cryptocurrency business in Canada, an MSB license is required for legal activities.
Companies with this type of license can perform the following financial transactions:
Allows a firm to exchange crypto for crypto, crypto for FIAT, or vice versa for a commission.
Transfer funds and execute cross border transfers for individuals and businesses alike
License for companies representing cryptocurrency wallets to store cryptocurrency, create encrypted client keys, as well as to store them.
Choose the best package of services for obtaining a MSB license in Canada
It should be noted that AML Officer we are providing is a full-fledged specialist who will participate operating activities in your company for up to 5 working hours per month. Moreover, such employee shall increase sustainability of your business activity in Canada within a long-term perspective.
After 8-10 weeks company will be fully registered as a Money Services Business and 2-3 weeks will be required extra to become fully operative and open a Bank account
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Stage 2
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Stage 4
Stage 5
Tax laws and standards
The Income Tax Act (ITA) applies to all virtual currency transactions. Cryptocurrency is not defined as an official means of payment but has the status of assets. If a customer pays for a service or commodity with cryptocurrency - this has the status of a profitable (barter) transaction. Such "goods" should be included in the seller's income for tax purposes. Entrepreneurs need to convert the value of the cryptocurrency to CAD to confirm the transaction to the IRS.
Tax Rate
Cryptocurrency activities may fall under the regulation of the Income Tax Act (ITA). The rate depends on the annual income: from 15% to 33%. In addition, it is necessary to consider the provincial tax rate, where the cryptocurrency company will operate.
Reporting
When profits from cryptocurrency activities are taxed as a profitable business - 100% of earnings are taxed. Only 50% of a company's profits are taxable if capital gains are reported for tax purposes. The Canadian government recommends that entrepreneurs make a regular report. It should include the date of cryptocurrency transactions and the price in Canadian dollars at the time of the transaction.Persons involved in cryptocurrency transactions are required to report any gains or losses from the purchase, exchange, or sale of digital currencies in their declarations.