Canada’s CSA: Crypto trading platforms have 30 days to ‘improve pre-registration’
“Recent insolvencies involving several crypto-asset trading platforms highlight the enormous risks associated with crypto-asset trading, particularly when conducted on unregistered platforms based outside of Canada.”
The Canadian Securities Administrators (CSA), the council of securities regulators in Canada’s provinces and territories, published a notice outlining enhanced investor protection obligations it expects from crypto-asset trading platforms (CTPs) operating in Canada.
Unregistered crypto trading platforms that continue to operate in Canada while pursuing registration are expected to provide an enhanced pre-registration commitment to their lead regulator within 30 days of publication of this notice.
“Immense Risks Associated with Trading Crypto Assets”
Stan Magidson, CSA Chairman and Chairman and CEO of the Alberta Securities Commission, said: “Recent insolvencies involving several crypto-asset trading platforms highlight the enormous risks associated with crypto-asset trading, particularly when conducted on unregistered platforms based outside of Canada.”
Pre-registration obligations include increased expectations for custody and segregation of crypto-assets held on behalf of Canadian clients and a prohibition on offering margin, credit or other forms of leverage to any Canadian client.
Crypto trading platforms will also be restricted from allowing customers to purchase or deposit stablecoins and proprietary tokens without the prior written consent of the CSA.
If a CTP is unable or unwilling to provide an extended pre-registration, the CSA expects that it will take appropriate action to deviate from existing Canadian users and impose restrictions to prevent Canadian users from accessing its products or services.
The Canadian regulator further warned citizens that trading in cryptoassets is highly risky and may not be suitable for many investors, especially retail investors, due to the highly volatile nature of the value and liquidity of cryptoassets.
If investors still choose to invest in cryptoassets, the CSA recommends that they consult the list of platforms registered with the CSA and learn the basics of cryptoassets before investing.
The CSA coordinates and harmonizes regulation for the Canadian capital markets, but cautioned that regulatory oversight cannot eliminate all risks associated with trading in cryptoassets.
