By George Ward
The Canadian Securities Administrators (CSA) have set new rules for unregistered cryptocurrency trading platforms, further strengthening their oversight over the sector. The move follows the launch of the Canadian Innovation Hub, a government initiative to spur innovation in space.
The new rules require cryptocurrency trading platforms pursuing registration with the Canadian Securities Administrators to undergo an “enhanced pre-registration” process within 30 days.
OSC’s Statement On Crypto Trading Platform Regulation
The Canadian authorities have upped their game concerning regulating crypto assets. The Ontario Securities Commission (OSC) has issued a statement affirming they ramp up oversight of cryptocurrency trading platforms nationwide.
The OSC has set out user protection commitments they anticipate from cryptocurrency asset trading platforms (CTPs) in Canada in light of the numerous bankruptcies experienced in the past year, including FTX and Voyager Digital.
The Canadian authorities intend to put in place safeguards to prevent similar incidents from happening in the future. Cryptocurrency trading platforms seeking registration must complete an “enhanced pre-registration” within 30 days of issuing the notice, beginning from February 2023.
The pre-registration requirements have improved to include details about the safekeeping and partition of crypto assets retained for Canadian customers. Moreover, it forbids explicitly providing Canadians with any form of loan, margin, or credit. The new norms also affect stablecoins.
Cryptocurrency trading platforms can only enable the purchase or deposit of stablecoins by obtaining written approval. This is also applicable to proprietary tokens.
Governments around the world are increasingly focusing on stablecoins. Last year, Canada declared its intention to regulate stablecoins by publishing a crypto and stablecoin consultation in its budget statement.
It noted that regulations must be able to adapt to the ever-evolving financial innovations. Governments are finding stablecoins a source of pain due to their potential to disrupt and pose risks to traditional fiat currencies.
As a result, they are taking a closer look at this sector to identify its risks and benefits.
Advancements In Oversight And Enforcement
Canada has quickened its pace of implementing regulations, living up to the promises made in its budget statement. For instance, in December 2022, the Canadian government declared a prohibition on leverage trading.
This alteration in regulations has caused major exchanges to modify their services. Crypto.com, for example, removed Tether from its list of options available in Canada to comply with the revised regulations on stablecoins. With the recent collapse of FTX, Canada is expressing a stronger desire to impose tighter controls, which may result in more revisions of crypto regulations soon.
The Canadian authorities’ latest move will help ensure that cryptocurrency trading platforms are held to a higher standard of accountability, and investors’ interests are adequately protected. With the sector continuing to grow, regulators must keep up with the trends to ensure that the sector remains safe and secure for investors.