CBlocks, a Miami based-based cryptocurrency startup is moving to Canada to avoid regulatory trouble in the United States. The firm has been unable to obtain clear legal guidance concerning its status, hence the move. Cryptocurrency laws in Canada are a lot less stringent than in the United States.
Unclear U.S. Regulations to Blame for the Move
According to the firm’s co-founders, they are not sure of how the regulatory agencies would classify the company. They even reportedly hired two lawyers from different firms, all to no avail. Both lawyers couldn’t come to a consensus regarding the status of the company under current U.S. regulations.
Auston Bunsen, one of the co-founders of CBlocks said that:
They can’t agree as to whether we’re a money services business or not.
Getting a precise answer to the question of whether the company is a money services business or not is of vital importance. A money services business has to comply with stringent reporting and record-keeping statutes.
According to Bunsen, one of the lawyers even indicated that the firm could register as a “memorabilia company.” This designation, however, did not sit well with the co-founders.
Given the fact that the startup is involved in the crypto market, statutory compliance is of utmost priority. The last thing the founders want is to run afoul of the law and be forced to pay huge fees. With all these in mind, the co-founders have decided to move to neighboring Canada.
The crypto regulations in Canada are a lot less stringent than in the United States. Bunsen says that money services businesses don’t require rigorous registration procedures. From an economic standpoint, it makes sense for them to move the company. To obtain a license in Canada, a citizen of the country must be a member of the board. Despite moving the firm to Canada, the co-founders still intend to work from Miami.
The CBlocks Business Model
Auston Bunsen, PK Banks, and Mario Aguayo established CBlocks in January 2018. The company helps the crypto-illiterate invest in cryptocurrencies by randomly purchasing five cryptos. These chosen tokens are loaded into an encrypted USB drive and sent to the investor. The USB drive acts as the wallet.
The company aims to remove the initial difficulty experienced by first-time crypto traders, especially those who don’t understand the market.
Will other similar startups make a move to Canada if U.S. laws aren’t standardized? Let us know in the comment section below.
Image courtesy of CBlocks.io, Shutterstock