I have tried to start the paper work with FINTRAC so that I can register as a MSB here in Canada (the Canadian regulations do not appear to have the $1000/day exemption the
US regulations do). If successful, I may buy low on the exchange, then sell slightly higher at locabitcoins. I have to be cautions, because, if I try it without informing my bank, they will probably close my account (when setting it up, I estimated 1-2 Bitcoin transactions per month, not 20-30).
I was told by FINTRAC representatives that they handle registration, not licensing of Money Service Businesses. They gave me a general Service Alberta number to inquire about licensing. I eventually left a message with the Licensing Department at 780-422-1335. The automated machine warns that license applications are processed on a FIFO basis with a 4 week delay.
I left a message asking about licensing requirements for selling less than $1000/day worth of Bitcoin. The lady I talked to (should have noted her name) was initially concerned that I would need to apply for a
Direct Seller's License. That is mainly intended for door-to-door salesmen. The requirements include posting a $10,000 bond, and contract wording advising the buyer that they have a 10 day cooling off period under the
Fair Trading Act. After the lady I talked to did some more research (and called back again), I was advised that I did not need a license if I was arranging the sale over the Internet prior to meetings. Todo:
look up the "Internet Sales Contract" regulations (
81/2001 ... with amendments)
The cooling off period, while reasonable in principle, has two major problems that I can foresee. 1. I may end up becoming a hedge against rapid price volatility. It is not clear I am allowed to give my customers negative ratings over such incidents. 2. There is a slight money laundering risk: since both Bitcoin and cash is fungible. That can be mitigated by not repeatedly selling to people exercising the option. Even with those restrictions, I may want to consider licensing if I want to be able to sell without using the Internet to hash out details. On the phone I was told the threshold was $1, but ALBERTA REGULATION 191/99 says "The amount for the purpose of section 24(a) of the Act is $25." (so they may have raised it)
I called FINTRAC back and was advised that I can not register without a legal business name. I will have to see how much work setting up a private company is. (I know a corporation requires bylaws and directors, etc). If I am successful, we may want to encourage others to do the same. The paper work will prompt them to exempt businesses doing less than $1000/day as they do in the US (I hope). My experience is limited to Alberta. While searching for licensing requirements, Quebec came up in searches (as requiring MSB licensing). Other provinces may also require licensing.
Update: Registering a "Trade name" took only a simple form and $55. Though the form did ask for an ID number (such as Drivers' ID). Apparently they do not have to be renewed. Because Trade names do not even technically have to be unique, you don't even need the business name search.
New update: A trade name is not a business.Update:
Direct Selling is the business of soliciting, negotiating or concluding sales contracts in person at any place other than the seller's place of business. These contracts are for goods or services that will be purchased by an individual for primarily personal, family or household use.
It appears the $10,000 bond, with a 2 year hold after operations cease, may be designed to make you seriously consider a 3 year lease. With an actual location, you can avoid some of the statutory contract wording as well. It also appears that I am free to sell (for example) Bitcoin vending machines to businesses without a license.
