Carney, Poilievre address caucuses ahead of Parliament's return
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Globe and Mail
an hour ago
- Globe and Mail
Financial crime loopholes in U.S. stablecoin law offer a cautionary tale for Canada
Hoopla over America's new stablecoin law is fuelling fears that Canada is missing out on the latest cryptocurrency boom. The Guiding and Establishing National Innovation for U.S. Stablecoins Act, or the Genius Act, was signed into law by President Donald Trump last week, creating a regulatory framework for stablecoins pegged to the U.S. dollar. (Stablecoins are cryptocurrencies that have values tied to another form of currency or financial asset to maintain steady prices.) A related bill, the Digital Asset Market Clarity Act, advanced to the U.S. Senate. The Clarity Act for short, it proposes to divvy up regulatory oversight for virtual assets between the Securities and Exchange Commission and the Commodity Futures Trading Commission. The crypto irony: Trump's new laws for stablecoins will only reinforce U.S. dollar dominance At first blush, the U.S. government's 'crypto week' was a resounding success because those two pieces of legislation are helping digital assets go mainstream south of the border. But anti-corruption groups, including Transparency International U.S., are warning the Genius Act and the Clarity Act include loopholes for money laundering and sanctions evasion, a forewarning for other countries, including Canada, as they vie for leadership in the US$5.7-billion global digital asset economy. 'To other countries, I would encourage lawmakers to actually take a risk-based approach and take into consideration that we have a global economy,' said Gary Kalman, executive director of Transparency International U.S., in an interview on Thursday. As Mr. Kalman points out, crypto is not a typical brick-and-mortar business and it carries a higher risk for illicit finance. That's because it is relatively easy to set up offshore crypto-issuing companies that sell into other countries without having a physical presence in those jurisdictions, he said. 'That is the type of risk analysis we would urge other countries to consider when moving forward with legislation,' he added. Transparency International U.S., the Free Russia Foundation, the Financial Accountability and Corporate Transparency Coalition and the Hudson Institute's Kleptocracy Initiative offer a sobering analysis of America's signature stablecoin legislation. 'The risks are real and urgent. Iran, North Korea and Russia have turned to cryptocurrency and stablecoins to bypass international sanctions and move illicit funds,' the anti-corruption groups state in a joint letter to top U.S. congressional leaders, including the Speaker of the House of Representatives Mike Johnson. 'If the U.S. does not close the loopholes that can be exploited by these actors, the financial architecture advanced in GENIUS and CLARITY will further accelerate the growth of opaque and lawless financial networks.' Specifically, the groups outlined four key problems with the two pieces of legislation. The first involves the Genius Act's differential treatment of stablecoin issuers registered in the United States versus those based in foreign or offshore jurisdictions. Under the law, foreign stablecoin issuers, such as Tether, the world's largest stablecoin, are able to participate in U.S. markets via decentralized exchanges and peer-to-peer transfers even if they don't register, the groups say. The U.S. Treasury, meanwhile, has the latitude to provide exemptions to foreign issuers, allowing them to participate in centralized exchanges after the expiration of a three-year grace period. As a result, foreign issuers will not receive proper regulatory oversight. A second problem involves the Genius Act's failure to impose anti-money-laundering (AML) and anti-terrorist-financing obligations on secondary-market participants, including digital asset exchanges, custodians and brokers. 'The result is a bill that affirms the status quo while ignoring how kleptocrats, terrorists and other criminal actors access and move digital assets,' states the letter. 'Further, GENIUS weakens compliance by stating that issuers must follow AML rules, only 'as applicable' – a vague and unenforceable standard.' A third weakness involves glaring gaps in sanctions enforcement. Notably, the Genius Act does not apply to anonymizing technologies, such as mixers, and other intermediaries that obscure funding sources, the groups say. The Clarity Act, meanwhile, overlooks sanctions evasion entirely even though digital assets have become a favoured tool of criminals to sidestep economic restrictions. Lastly, exemptions for decentralized services and platforms under the Genius Act, coupled with the Clarity Act's failure to require ownership disclosures from all market participants, will frustrate enforcement of those laws, according to the groups. We won't let Americans buy our biggest bank. Why let them buy our biggest crypto firm? Canada, meanwhile, is facing mounting calls to create its own comprehensive national strategy for crypto, including stablecoins. 'Stablecoins are reshaping global finance, but Canada is still on the sidelines,' states a new report by Western University's Ivey Business School. 'While other countries use them to strengthen payments and attract investment, Canada lacks a homegrown alternative tied to its currency.' The report rightly urges Canada to create a 'unified regulatory framework' for digital assets, noting oversight is currently split among regulators including the Canada Revenue Agency, the Canadian Securities Administrators, the Financial Transactions and Reports Analysis Centre of Canada and provincial agencies. Creating a national regulatory framework should indeed be a priority because businesses need a consistent set of rules. But in doing so, the federal government must draw lessons from America's legislative missteps on financial crime. Canada is already being marketed abroad as a secrecy jurisdiction that can be readily exploited by kleptocrats, money launderers, sanctions evaders and other crooks. In the rush to catch up on crypto, Ottawa cannot afford to replicate Washington's mistakes.
Vancouver Sun
2 hours ago
- Vancouver Sun
Trump's tariff threats against Canada face legal hurdles ahead of August deadline
Donald Trump's plan to realign global trade faces its latest legal barrier this week in a federal appeals court — and Canada is bracing for the U.S. president to follow through on his threat to impose higher tariffs. While Trump set an Aug. 1 deadline for countries to make trade deals with the United States, the president's ultimatum has so far resulted in only a handful of frameworks for trade agreements. Deals have been announced for Japan, Vietnam, Indonesia, the Philippines and the United Kingdom — but Trump indicated last week that an agreement with Canada is far from complete. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. 'We don't have a deal with Canada, we haven't been focused on it,' Trump told reporters Friday. Trump sent a letter to Prime Minister Mark Carney threatening to impose 35 per cent tariffs if Canada doesn't make a trade deal by the deadline. The White House has said those duties would not apply to goods compliant with the Canada-U.S.-Mexico Agreement on trade. Canadian officials have also downplayed expectations of a new economic and security agreement materializing by Friday. 'We'll use all the time that's necessary,' Carney said last week. Countries around the world will also be watching as Trump's use of a national security statute to hit nations with tariffs faces scrutiny in the United States Court of Appeals for the Federal Circuit. The U.S. Court of International Trade ruled in May that Trump does not have the authority to wield tariffs on nearly every country through the use of the International Economic Emergency Powers Act of 1977. The act, usually referred to by the acronym IEEPA, gives the U.S. president authority to control economic transactions after declaring an emergency. No previous president had ever used it for tariffs and the U.S. Constitution gives power over taxes and tariffs to Congress. The Trump administration quickly appealed the lower court's ruling on the so-called 'Liberation Day' and fentanyl-related tariffs and arguments are set to be heard in the appeal court on Thursday. The hearing combines two different cases that were pushing against Trump's tariffs. One involves five American small businesses arguing specifically against Trump's worldwide tariffs, and the other came from 12 states pushing back on both the 'Liberation Day' duties and the fentanyl-related tariffs George Mason University law professor Ilya Somin called Trump's tariff actions a 'massive power grab.' Somin, along with the Liberty Justice Center, is representing the American small businesses. 'We are hopeful — we can't know for sure obviously — we are hopeful that we will continue to prevail in court,' Somin said. Somin said they are arguing that IEEPA does not 'give the president the power to impose any tariff he wants, on any nation, for any reason, for as long as he wants, whenever he feels like it.' He added that 'the law also says there must be an emergency and an unusual and extraordinary threat to American security or the economy' — and neither the flow of fentanyl from Canada nor a trade deficit meet that definition. U.S. government data shows a minuscule volume of fentanyl is seized at the northern border. The White House has said the Trump administration is legally using powers granted to the executive branch by the Constitution and Congress to address America's 'national emergencies of persistent goods trade deficits and drug trafficking.' There have been 18 amicus briefs — a legal submission from a group that's not party to the action — filed in support of the small businesses and states pushing against Trump's tariffs. Two were filed in support of the Trump administration's actions. Brent Skorup, a legal fellow at the Washington-based Cato Institute, said the Trump administration is taking a vague statute and claiming powers never deployed by a president before. The Cato Institute submitted a brief that argued 'the Constitution specifies that Congress has the power to set tariffs and duties.' Skorup said there are serious issues with the Trump administration's interpretation of IEEPA. 'We don't want power consolidated into a single king or president,' he said. It's expected the appeals court will expedite its ruling. Even if it rules against the duties, however, they may not be immediately lifted. White House Press Secretary Karoline Leavitt has said the Supreme Court should 'put an end to this.' There are at least eight lawsuits challenging the tariffs. Canada is also being hit with tariffs on steel, aluminum and automobiles. Trump used different powers under the Trade Expansion Act of 1962 to enact those duties. Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our daily newsletter, Posted, here .
National Post
2 hours ago
- National Post
Trump's tariff threats against Canada face legal hurdles ahead of August deadline
Donald Trump's plan to realign global trade faces its latest legal barrier this week in a federal appeals court — and Canada is bracing for the U.S. president to follow through on his threat to impose higher tariffs. Article content While Trump set an Aug. 1 deadline for countries to make trade deals with the United States, the president's ultimatum has so far resulted in only a handful of frameworks for trade agreements. Article content Article content Article content Deals have been announced for Japan, Vietnam, Indonesia, the Philippines and the United Kingdom — but Trump indicated last week that an agreement with Canada is far from complete. Article content Trump sent a letter to Prime Minister Mark Carney threatening to impose 35 per cent tariffs if Canada doesn't make a trade deal by the deadline. The White House has said those duties would not apply to goods compliant with the Canada-U.S.-Mexico Agreement on trade. Article content Article content Countries around the world will also be watching as Trump's use of a national security statute to hit nations with tariffs faces scrutiny in the United States Court of Appeals for the Federal Circuit. Article content The U.S. Court of International Trade ruled in May that Trump does not have the authority to wield tariffs on nearly every country through the use of the International Economic Emergency Powers Act of 1977. Article content The act, usually referred to by the acronym IEEPA, gives the U.S. president authority to control economic transactions after declaring an emergency. No previous president had ever used it for tariffs and the U.S. Constitution gives power over taxes and tariffs to Congress. Article content Article content The Trump administration quickly appealed the lower court's ruling on the so-called 'Liberation Day' and fentanyl-related tariffs and arguments are set to be heard in the appeal court on Thursday. Article content George Mason University law professor Ilya Somin called Trump's tariff actions a 'massive power grab.' Somin, along with the Liberty Justice Center, is representing the American small businesses.
