The Canadian Securities Administrators (CSA) published a notice on February 22 outlining the new commitments it expects from crypto asset trading platforms (CTPs) applying to register in the country. The CTPs will sign a new version of the pre-registration commitments (PRU), which are legally binding documents. The registered CTPs will be contacted by their main regulators to find out if they meet the new expectations.
The new commitments represent investor protections in light of the wave of CTP insolvencies that occurred in 2022, the CSA wrote. The new commitments address issues such as asset segregation, leverage, capital determination and transparency, among others. The notice devotes by far the most space to:
“A prohibition by the CTP with respect to clients purchasing or depositing Value Referenced Crypto Assets (commonly referred to as stablecoins) through crypto contracts without the prior written consent of the CSA.”
The notification explained that “CTPs are prohibited from allowing Canadian clients to enter into crypto investment contracts to buy and sell any crypto asset that is itself a security and/or derivative. […] The staff is of the opinion that fiat-backed crypto assets generally meet the definition of “security” and/or would meet the definition of “derivative” in various jurisdictions.” The CSA “would also not expect to consent” to other types of stablecoins, such as algorithmic stablecoins.
However, the CSA may make exceptions in writing. The notice said: “We recognize that VRCAs can be […] as an on-ramp to deposit assets in a CTP, for trading other crypto assets, as a store of value in times of volatility in crypto asset markets or to avoid converting your crypto assets into currency, or […] as a means of payment.
Coinsquare, a CTP registered in Canada, included the stablecoins USD Coin (USDC) and Dai (DAI) among its 40 offers at press time.
The CSA is an umbrella organization for Canadian provincial regulators. His February 22 announcement was the second update to a document that was filed in August.
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Canadian Securities Administrators may intend to tighten rules for cryptocurrency exchanges later this month. pic.twitter.com/wSytpVZnFq— Cryptocurrency Agency (@alsayedomar1252) February 17, 2023
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