I've been blogging about legal issues for Canada's cryptocurrency/blockchain industry since 2013. In that time, there's been a transition from a focus on payments/commercial issues to areas that are more commonly seen by large enterprises like securities law, sanctions, and Excise Tax Act issues. Below are a few sareas that most frequently come up today with crypto companies, along with the sorts of questions that people have about them.
Key Areas of Canadian Law
- Securities: Is a particular coin/token a security? Is the mode of delivery to the customer potentially creating a security? (re: CSAN 21-327)
- AML: Is the company dealing in virtual currency? Does it need to register by June, re: new MSB rules?
- Sales Tax (HST): Does it need to be charged on the sale of cryptocurrency units? What about on the commissions charged on top of the transaction? Will the upcoming changes have any impact?
- Corporate: Is it necessary to isolate registered/regulated business units?
- Sanctions: Are US/EU/Canadian sanctions relevant? Where are the customers?
- Commercial: Cryptocurrency companies are under scrutiny and often engage in riskier deals, do the contracts sufficiently address risks?
- Banking: Obtaining and maintaining a bank account is hard, and depends in part on compliance with Canadian law.
- Contracts: Templates speed up deals and focus attention. High-quality legal agreements demonstrate professionalism and allocate risk appropriately.
- Patents: Is there a patentable invention in the new product/service? Is protection worth the cost?
Many of the above issues are common for internationally-focussed tech startups (common in Canada due to our much larger neighbour). But the issues crypto/blockchain companies face tend to be more significant and more carefully scrutinized due to the number of bad actors that have appeared over the last many years (re: QuadrigaCX and many international frauds).
Picking A Good Lawyer
Toronto has a number of lawyers that have expertise in these matters - I tried to catalogue them here last year. Keep in mind when reviewing that last I prepared that there are also many other lawyers who are experts in the above areas who may be able to provide better legal advice than someone who is knowledgeable about cryptocurrency/blockchain.
A tip for finding the right lawyer: speak with colleagues and companies in the space first, then shortlist lawyers to investigate. Lawyers are expensive but important - spend time on selecting the team that's right for you.
Staying On Top of the News
A good resource to follow (there are many!) is the Digital Chamber of Canada's Twitter account: @digichambercdn.