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Author Topic: Alberta MSB registration log.  (Read 4421 times)
phillipsjk
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October 17, 2014, 06:22:46 AM
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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:
Quote from: Direct Seller Definition
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.

James' OpenPGP public key fingerprint: EB14 9E5B F80C 1F2D 3EBE  0A2F B3DE 81FF 7B9D 5160
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phillipsjk
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October 22, 2014, 06:06:28 PM
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On Monday I got a call from FINTRAC. They wanted a description of my business activities in writing. The person I talked to claimed to have not received the brief description I had sent on October 2nd (did not receive an e-mail confirmation for that one). Apparently, FINTRAC is examining Bitcoin businesses on a case-by-case basis until the regulations implementing the new legislation passed in the spring are drafted.

I think to avoid delays later, I will draft a document explaining everything Bitcoin related I plan to do over the next year or so -- even if unlikely.

New Bitcoin rules won't apply to sale and purchase with bitcoins - Canada

In slightly unrelated news, I was disappointed in the EULA accompanying Chrome on the new smartphone I bought for this venture:
Quote from: Google Chrome Additional Terms of Service
11. Technology Pass-through Terms.

(a) Except pursuant to applicable permissions or agreements therefor, from or with the applicable parties, Sublicensees shall not use and shall not allow the use of, the Adobe Software for the encoding or decoding of mp3 audio only (.mp3) data on any non-pc device (e.g., mobile phone or set-top box), nor may the mp3 encoders or decoders contained in the Adobe Software be used or accessed by any product other than the Adobe Software. The Adobe Software may be used for the encoding or decoding of MP3 data contained within a swf or flv file, which contains video, picture or other data. Sublicensee shall acknowledge that use of the Adobe Software for non-PC devices, as described in the prohibitions in this section, may require the payment of licensing royalties or other amounts to third parties who may hold intellectual property rights related to the MP3 technology and that Adobe nor Sublicensee has not paid any royalties or other amounts on account of third party intellectual property rights for such use. If Sublicensee requires an MP3 encoder or decoder for such use, Sublicensee is responsible for obtaining the necessary intellectual property license, including any applicable patent rights.
(Bold mine)
So apparently I am not allowed to use the Adobe software as an MP3 player... because of my computer's form-factor. Incidentally, when I tried to create a Google Account for my company to complain about this on their help forums, I was greeted with the following error:
Quote from: Google accounts
Google could not create your account

In order to have a Google Account, you must meet certain age requirements. To learn more about online child safety, visit the Federal Trade Commission's website.
The difficulty is that my company is considered a child because it is less than a week old! The FAQ on the topic was not helpful.

I think I will save trouble by Installing free software and hardening the phone. I was not planning on using the cellular modem immediately anyway. I want to try using  Shaw Go Wifi access points as my transit carrier and Diamondcard as my phone carrier (the US location does concern me). "Airplane mode" does not appear to disable WiFi. I don't know where the tor project got their lists of Bitcoin accepting VOIP services, but Diamond card is not listed in either one.

James' OpenPGP public key fingerprint: EB14 9E5B F80C 1F2D 3EBE  0A2F B3DE 81FF 7B9D 5160
phillipsjk
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October 24, 2014, 07:21:08 PM
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Today I went to the bank to try to open a commercial account for my new Money Service Business (FINTRAC registration still pending..). I was informed that I need a registration certificate from the Alberta government. Apparently the simple Trade Name registration does not count. I suspect FINRAC will want proper Business registration as well, so I should register (thinking sole proprietorship).

I was also informed that Canadian Western Bank now refuses to open Bitcoin-related Accounts over AML concerns. I was informed by the branch compliance officer that "Bitcoin is not traceable". I was also informed that she did not want to debate the issue when I informed her that: in fact, Bitcoin was very traceable. She seemed concerned that Bitcoin transactions don't have to be tied to any specific entity.

So, I may be closing my personal account at CWB that I opened solely so that I can make use of Bitcoin exchanges without losing my account at another Bitcoin hostile bank.

Update (October 29, 2014): I went to a local registry and asked about registering a sole proprietorship. Apparently that, and a partnership, are the same as registering a Trade Name after all. My bank also closed my account when I asked why the trade name registration paper was not enough evidence. The lady I talked to clarified that it was in fact enough to prove the existence of the business (but that they don't want to deal with Bitcoin related businesses).

James' OpenPGP public key fingerprint: EB14 9E5B F80C 1F2D 3EBE  0A2F B3DE 81FF 7B9D 5160
phillipsjk
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November 11, 2014, 04:11:55 AM
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I wrote up a brief draft of my Anticipated activities of Economic Prisoner report for FINTRAC. The initial version is a summary only, with little detail.

I tried presenting said report to my new banker while opening a business account. That way, I learned that CIBC also does not like Bitcoin. So I now have the process of testing for bank hostility down to one day.

Edit: Company Name is no longer secret since I have now registered the .bit domain.

James' OpenPGP public key fingerprint: EB14 9E5B F80C 1F2D 3EBE  0A2F B3DE 81FF 7B9D 5160
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November 11, 2014, 04:14:50 AM
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I wrote up a brief draft of my Anticipated activities of Company Name report for FINTRAC. The initial version is a summary only, with little detail.

I tried presenting said report to my new banker while opening a business account. That way, I learned that CIBC also does not like Bitcoin. So I now have the process of testing for bank hostility down to one day.

Try TD.

http://www.tdcanadatrust.com/

Cavirtex (a bitcoin exchange) works directly with them, and I have had money taken from and deposited to my TD account from the sale/purchase of bitcoins.  Smiley

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phillipsjk
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November 11, 2014, 08:09:06 AM
 #6

Try TD.

They used to be the most Bitcoin hostile. I think I want to try a few others (like Alberta Treasury Branches) first.

Update Nov 17, 2014: On thursday, I opened a new personal chequing account with ATB. I don't find out until later this week if they are going to close my account over potential Bitcoin usage (that is when I am supposed to get an update on opening a commercial account).

I was delayed by a day over a credit check. I am not sure if that was just an excuse to delay, or the lady really could not pull my credit from the information given. I had no problem with CIBC (after giving the same information), which also insisted on a credit check.

It appears that the reason they need a credit check to open an account is so that they can try to push a credit card on you. However, in the past I was turned down for an account a Servus Credit Union because I was debt-free for over 3 years (and thus had no public credit history). They will turn you down even if you insist you don't want a credit card.

James' OpenPGP public key fingerprint: EB14 9E5B F80C 1F2D 3EBE  0A2F B3DE 81FF 7B9D 5160
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