Digital money experiments and the growing demand for digital fintech payment systems influence the traditional banking sector requiring strong collaboration among policymakers, incumbent financial institutions and new entrants.
The Canadian Money Service Business Association (CMSBA), representing more than 800 MSBs, is petitioning the federal governments Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the agency responsible for regulating fintech, to clearly define money services businesses to include digital currencies businesses.
In a regulatory Catch-22, as part of their de-risking strategy, banks need FINTRAC to define digital fintech startups as money services businesses before they can offer a business account. The Financial Post reports that an unidentified bank was fined USD 1.1 million by FINTRAC for providing accounts to money service businesses and that an apparent crackdown is making it harder for fintech companies to get bank accounts, according to nasdaq.com. Furthermore, Coinbase recently notified its Canadian customers that it was withdrawing from the Canadian market and could no longer support transactions in Canadian dollars.
Bank of Canada Deputy Governor Carolyn Wilkins noted that what she calls traditional trusted intermediaries may be replaced by more convenient technologies and she doesnt believe that Canadas regulatory body is lagging behind. However, the system is set up in such a way that many companies are having a difficult time playing by all the rules, all the time, she continues.
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