The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have outlined securities law requirements that apply to crypto asset trading platforms (CTPs).
Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers, said. “The guidance in our notice details steps platform operators need to take to comply with securities legislation as they prepare to fully integrate into the Canadian regulatory structure. To bring their operations into compliance, CTPs should contact their local securities regulator now to discuss the registration process and address applicable requirements.”
Andrew J. Kriegler, President and CEO, IIROC, commented: “We are pleased to work with the CSA on such an important initiative. This framework provides guidance on how the regulatory requirements may be tailored to a platform’s business, without compromising investor protection or market integrity.”
The guidance refers to platforms whether trading crypto assets that are securities or derivatives, or contractual rights or claims to underlying crypto-assets such as bitcoin or ether.
The notice is designed to foster innovation and provide flexibility while ensuring the CTPs operate in an appropriately regulated environment. Requirements may be tailored, provided that key risks are addressed and investor protection is not compromised.
“We remind all CTPs that are dealing with Canadians, including foreign-based CTPs, that they are expected to comply with Canadian securities legislation. Failure to do so could result in CSA members pursuing enforcement action”, Louis Morisset added.
The regulators’ joint proposed Framework for Crypto-Asset Trading Platforms received 52 comment letters in response to the consultation paper and consulted extensively with industry stakeholders on issues specific to CTPs.
Comments included crypto platforms seeking to become reporting issuers through an initial public offering or through reverse take-overs, changes of business, Capital Pool Company qualifying transactions, or similar transactions.
The authorities admit to potential public interest concerns with a CTP that is required to be registered, but that is not, becoming a reporting issuer.
Ontario Requires Crypto Platforms to Register Operations by April 19, 2021
The Ontario Securities Commission (OSC) has notified crypto trading platforms offering derivatives or securities trading Ontario residents that they are to comply with Ontario securities law or face potential regulatory action.
Platforms must contact OSC staff by April 19, 2021, to discuss how to bring their operations as a dealer or marketplace into compliance.
Platforms located outside of Ontario that allow Ontarians access are regarded as operating in Ontario for the purposes of securities regulation.
Grant Vingoe, Chair and CEO at the OSC, said: “Unregistered crypto asset trading platforms expose Ontario investors to significant risks, including potential loss, theft and misuse of their assets. The recent explosion of unregistered platforms has magnified these risks. Regulatory oversight serves a critical role in investor protection, and we expect platforms to act swiftly to bring themselves into compliance with Ontario securities law.”