Emergencies Act Left Crypto Businesses Scrambling, Committee Hears

Trucks and protesters block downtown streets near the Parliament Buildings in Ottawa on Feb. 15, 2022. Scott Olson/Getty Images

The financial measures imposed through the Emergencies Act to target the participants in the Freedom Convoy left some businesses scrambling to interpret the broad order, the House Finance Committee heard on March 14.

“We have a very highly skilled team of AML [anti-money laundering] professionals and lawyers,” said WealthSimple’s chief legal officer Blair Wiley, yet the team was “calling everyone we knew, peers in the industry, to try to understand how people were applying and interpreting those definitions to be able to be both responsive to government policy and the law, but also not cast too wide of a net.”

Wiley was answering a question from Conservative MP Philip Lawrence related to the language contained in the Emergency Economic Measures Order, which applied to “designated persons” defined as any “individual or entity that is engaged, directly or indirectly” in a prohibited activity defined by the Emergency Measures Regulations.

Lawrence said the definition was “extremely broad” and asked Wiley if that made it hard to identify people to the authorities.

“I think the initial order and the breadth of that definition, which you’ve alluded to, did present challenges for companies like WealthSimple,” Wiley said.

“So it was a very difficult and stressful period when the order first came down.”

The meeting of the Finance Committee was part of a broader study into the Emergencies Act that was invoked by the government on Feb. 14 to suppress protests and blockades demanding the lifting of COVID-19 restrictions.

With the act, the government included financial measures to go after the movement’s fundraising and to freeze participants’ bank accounts without a court warrant. The RCMP provided a list of names to financial institutions of all types, and institutions also used their own methodologies to track down participants.

This was done to “discourage” individuals from participating in the movement or to compel them to leave the Ottawa protest site, the RCMP testified during a previous committee meeting on March 7.

Witnesses for the March 14 meeting included financial services and cryptocurrency platforms like WealthSimple, business groups, as well as the National Chief of the Assembly of First Nations RoseAnne Archibald.

Wiley and Dustin Walper, the representative of cryptocurrency platform Newton Crypto Ltd., told the committee that their companies did not freeze accounts, but they did block some transactions from occurring, which constituted small amounts.

“From our perspective, from our client base, we did not see any significant volumes that were attempted to fund a transaction for the convoy,” Wiley said.

The RCMP said on March 7 it identified and disclosed 170 Bitcoin wallet addresses linked to crowdfunding for the convoy, which had raised 20.7 Bitcoins valued between $1 to $1.2 million during the period of the public order emergency.

Wiley and Walper also attempted to counter the assertion that the world of cryptocurrency is the “Wild West.”

When the government invoked the act, it said it would seek to make some financial measures permanent, such as including crowdfunding and cryptocurrency platforms under the country’s anti-money laundering and terrorist financing (AMLTF) regulations.

Walper said his business has been registered since 2019 with FINTRAC, Canada’s financial intelligence agency responsible for tracking AMLTF.

“Cryptocurrency trading platforms in Canada are becoming highly regulated businesses, more so than in most of the United States, almost every state,” he said.

Wiley said WealthSimple was already registered with FINTRAC as well. “Crypto is a legitimate and compelling emerging asset class worth over $2 trillion and owned by millions of Canadians. We believe those Canadians deserve the same protections they would expect regarding any other investment,” he said.

Wiley and Walper also remarked that the government could have communicated better on the matter of the emergency and accompanied financial measures.

The Canadian Bankers Association testified on March 7 that they were given a heads up by the Department of Finance about the economic measures to be applied in the Act, but details were still lacking. Cryptocurrency platforms were not advised in the same way.

“We were sort of on the receiving end, via notices received through indirect channels, and through publication of orders on government websites,” said Wiley.

“Yeah, I agree. We were in a similar situation where it was quite unclear initially what exactly the implications would be for us. So we would definitely welcome more direct channels in the future,” added Walper.