On 12 February 2015, Quebec’s Autorité des marchés financiers (AMF) amended its Policy Statement to the Money-Services Businesses Act, to make it clear that businesses operating (a) virtual currency ATMs; or (b) platforms for virtual currency trading must be authorised by the AMF.

The Policy Statement explains how the AMF interprets and applies Quebec’s Money-Services Businesses Act, and the related Regulations. In particular, it explains that “any person … operating a money-services business for remuneration must hold a licence … The Authority issues licences in … the [following] classes …:

1) Currency exchange:…

2) Funds transfers: …

3) Issue or redemption of traveller’s cheques, money orders or bank drafts: …

4) Cheque cashing: …

5) Operation of automated teller machines: The operation of automated teller machines consists in making available to the public a means of withdrawing cash funds from a machine without the intervention of a natural person. Making available to the public a means of purchasing, with cash, virtual money from an automated distributor, without the intervention of a natural person, also constitutes the operation of automated teller machines.

In its press statement, the AMF is careful to point out that:

(a) Whilst the AMF oversees virtual currency ATM and trading platform businesses, it does not regulate virtual currencies as well;

(b) The fact that a business holds an AMF licence does not protect consumers from the risks associated with virtual currencies themselves;

(c) Transactions involving virtual currency are not covered by the financial services compensation fund or the deposit insurance fund;

(d) The anonymity of virtual currency transactions and their relatively low costs may entice fraudsters to set up Ponzi and other schemes to lure investors. Virtual currency may be used to facilitate fraudulent transactions or simply fabricate fraudulent investments. This type of fraud may involve on-line offerings or trading platforms not authorized by the AMF.

Even so, this is another jurisdiction taking a positive step towards regulation in this area.

Posted by Cooley