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Canadian securities regulators outlines guidance for compliance for crypto asset trading platforms

By Pavithra R

March 30, 2021

  • Canada
  • Canadian Securities
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Canadian securities regulators outlines guidance for compliance for CTPThe Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) has published a notice to guide how securities legislation applies to Crypto Asset Trading platforms or CTPs and how they may be tailored by regulators for the CTPs business model.

The guidance applies to platforms that facilitate or propose to facilitate the trading of:

  • crypto-assets that are securities (Security Tokens), or
  •  instruments or contracts involving crypto-assets (Crypto Contracts).

The notice includes an overview of the applicable existing regulatory requirements and areas where there may be flexibility in how the requirements apply to CTPs, provided the key risks are addressed and investor protection is not compromised.

“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,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.

The overall goal of the approach outlined in the notice is to ensure there is a balance between needing to be flexible to foster innovation in the Canadian capital markets and meeting the regulatory mandate of promoting investor protection and fair and efficient capital markets.

“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,” said Andrew J. Kriegler, President and CEO, IIROC. 

The notice does not introduce new rules specifically applicable to CTPs, as they are already subject to existing requirements under securities legislation in Canada. It rather guides how the existing requirements of securities legislation may be tailored through terms and conditions on the registration or recognition of CTPs and through discretionary exemptive relief with appropriate conditions.

“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,” added Louis Morisset. 

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