The pawn shop claims sound bogus. With simple database technology and a web interface, a bike could be checked and registered in seconds. The cost would likely be less than adding more secure parking, assuming that Toronto already has a reasonably competent IT staff (if not, hire me

). The law would need some additional teeth to penalize shops that enter false serial numbers.
Of course, this may just force thieves into the business of sanding off serial numbers, but anything that makes their work harder should reduce the total number of thefts/resells. It could also force them into more ebay stuff, but that also takes more work than selling locally.