Canada tightens rules for crypto exchanges, margin trading
Canada’s financial regulator will reportedly roll out a coordinated oversight regime for cryptocurrency activities later this month.
Two people who have been briefed on the plans told CoinDesk that all crypto trading platforms seeking registration will be required to sign commitments to comply with investor protections.
The new rules will also make it more difficult for retail investors to trade cryptocurrencies using leveraged bets in the wake of the FTX collapse.
The Canadian Securities Administrators (CSA) plans to strengthen oversight of cryptocurrency exchanges operating in the country. As part of a basket of new registration requirements, crypto seekers will have to agree to tighter rules, including bans on margin and leverage trading.
In addition, the proposal prevents crypto providers from accepting payments via credit cards and requires them to keep customer funds separate from their own operating funds.
These measures also include proposals that providers should be forced to hold all Canadian clients’ assets “with an appropriate custodian and separate those assets from the platform’s proprietary business.”
In order to continue operating while their application is being processed, cryptocurrency platforms must provide their primary regulator with a pre-registration commitment. By making these commitments, the crypto exchange acknowledges that the platform is bound by terms and conditions that address issues of investor protection.
If a cryptocurrency trading platform is unable to submit an undertaking or fails to comply, CSA members may seek legal action.
The CSA went on to warn that it was reaching out to crypto-asset trading platforms to start the registration process, or face enforcement, including interim orders.
The new registration rules come amid a nationwide attack on unregulated exchanges. Binance, the world’s largest cryptocurrency exchange, informed a Canadian provincial regulator last year that it would no longer accept new clients. The industry giant apparently chose to pull out of Canada, rather than comply with securities laws or face regulatory scrutiny.
The move follows the Ontario Securities Commission’s crackdown on Binance back in 2021 for their alleged non-compliance with securities laws. At the time, the OSC said Binance has broken its word to regulators after it previously told its employees that no new transactions involving Ontario residents would occur.
