Miami-based Cblocks has announced that it will relocate to Canada, citing a lack of regulatory clarity regarding cryptocurrency in the United States as the principal catalyst for the move.
Also Read: South Korean Top Regulator Considers Easing Cryptocurrency Regulations
Cblocks to Relocate to Canada
Cblocks, a Miami-based company that generated $32,000 in a month through selling beginner traders mystery boxes of assorted cryptocurrencies, has announced its intention to move to Canada.
Cblocks has cited regulatory hurdles as the principal reason for the relocation, claiming that lawyers from two different legal firms were unable to determine the precise legal classification and legislative apparatus governing the company’s operations.
Cblocks sells an encrypted USB containing five random cryptocurrencies that are chosen on behalf of customers in exchange for a $50 USD service fee. Despite the company’s primary product tangibly comprising a USB drive, Cblocks could be considered a money services business under U.S. law – as the cryptocurrencies distributed by the company may be considered to be securities.
“They can’t agree as to whether we’re a money services business or not,” Cblocks chief executive officer and co-founder, Auston Bunsen said. “Canada has much friendlier regulation when it comes to cryptocurrencies. They only require a federal registration,” Mr. Bunsen added.
Canadian Regulatory Apparatus Less Expensive for Cblocks
In addition to stringent anti-money laundering requirements, being classified as a money services business would incur significant registration fees. In Canada, complying with the same money services regulations will not incur fees, further motivating the company’s relocation.
Cblocks expects to be officially incorporated within a few weeks, anticipating to launch for Canadian customers during May. Despite the company’s official relocation, Cblocks’ founders will stay in Miami, and exclusively target Canadian users for the time being, however, at least one Canadian citizen is needed on the company’s board in order for Cblocks to qualify for Financial Transactions and Reports Analysis Centre of Canada licensing.
Growing Calls for Regulatory Clarity From Crypto Industry
Managing Director of United Kingdom-based online trading platform, Iqbal Gandham, also chairs a trade group seeking greater clarity regarding the regulatory implications for
cryptocurrency businesses.
“The benefits of regulation are clear,” Mr. Gandham said. “An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself.”
Mr. Gandham advocates the development of a regulatory apparatus tailored to the particularities of cryptocurrency, criticizing suggestions that existing financial legislation can be stretched to govern the operations of the cryptocurrency companies. “Given that we are dealing with new and nascent technology, we wouldn’t want to simply cherry pick from existing regulation developed for other asset classes,” Mr. Gandham said.
Marc Ostwald, global strategist for ADM Invest Services International in London, emphasized the significance of anti-money laundering considerations for businesses operating with cryptocurrency. “This is all about where the burden of proof lies for anti-money-laundering, so wanting regulations seems very sensible,” Mr. Ostwald said. “Even if you’re making a killing in trading, someone could come up with an unexpected piece of regulation that puts a big red line through your business plan.”
Eric Demuth, the co-chief executive officer of Vienna-based Bitpanda, stated: “We’d be happy to have regulations, so we know where we stand.”
Do you think that cryptocurrency regulations are in need of reform? Share your thoughts in the comments section below!
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