Tomorrow, the world’s first permanent Bitcoin ATM will be installed in a Vancouver coffee shop by Bitcoiniacs, a firm co-founded by three high school friends from Sechelt, British Columbia.
In order to access or exchange Bitcoins through this machine, you’ll need to have your palm scanned before each use (see demo here). Individuals are limited to exchanging $3,000 per day, which is in accordance with what the law requires of a money services business.
Given that part of the digital currency’s appeal is the anonymity it provides, some have complained that biometrics and Bitcoin just don’t mix.
But here’s the surprising part: the owners of the Bitcoin ATM are not legally obligated to implement this palm scanner or limit transactions to $3,000 per day.
That’s because a loophole in Canadian law puts Bitcoin outside the scope of the Financial Transactions and Reports Analysis Center of Canada (FINTRAC), the agency that monitors money services businesses.
Business in Canada asked FINTRAC spokesman Peter Lamey why bitcoin exchanges and ATMs don’t fall into this category. He told us companies that deal in Bitcoin cannot be considered money services businesses under the current terms of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
As he said, money is defined as the “currency of a country.” Bitcoin belongs not to any one country, but to the Internet.
If any Canadian Bitcoin dealer were to facilitate the transaction of the digital currency into American dollars or euros, they would then be considered a money services business and would need to register with FINTRAC.
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BiC asked Bitcoiniacs co-founder Mitchell Demeter why the firm has instituted this palm scanner and limited daily transactions even though it doesn’t have to.
“It’s to protect us and our business personally, just in case there is any fraud,” he said, “As well, if FINTRAC does decide to regulate Bitcoin businesses in the future, we’re just being proactive and following any guidelines that would be required of us. The banks require us to be proactive and follow the anti-money laundering guidelines that FINTRAC does put on money services businesses.”