Fed up with regulatory uncertainty over cryptocurrencies in the United States, Miami-based company CBlocks has announced that it will be moving to Canada in the near future.
In an interview with Business Insider, Cblocks explained it is facing legal regulatory hurdles in the United States, after the two legal firms it commissioned have been unable to determine to appropriate legal classification and legislative standing of the company due to its operations in the cryptocurrency sphere.
Cblocks sells “mystery boxes” containing assorted cryptocurrencies to beginner traders. According to the company, it generated at least $32,000 in a month from the sales of these boxes.
The startup has an innovative business model, in which it sells an encrypted USB drive which contains five random cryptocurrencies that are chosen on behalf of customers against a $50 service fee. Although the company’s primary product is actually a USB drive, CBlocks may be deemed to be a money service business under U.S. laws since the cryptocurrencies it distributes may be described as securities and thus fall under the appropriate legislation.
“They can’t agree as to whether we’re a money services business or not,” CBlocks co-founder and CEO Auston Bunsen told the news outlet. “Canada has much friendlier regulation when it comes to cryptocurrencies. They only require a federal registration.”
CBlocks is reluctant to continue operating in the United States since it would have to comply with very stringent anti-money laundering requirements, amongst other things. The business would also incur significant registration fees, whereas Canada does not charge fees for compliance with business regulation. Money services companies also don’t need to be licensed in Canada the way they do in the United States.
CBlocks are expecting to incorporate officially within a few weeks and anticipate a customer launch later this month. Although the company is relocating to Canada, the company’s founders intend to remain in Miami for the time being whilst making a pitch to Canadian users. Still, one Canadian citizen is required to be on the board for CBlocks to qualify for Financial Transactions and Reports Analysis Centre of Canada Licensing.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.