- A new guideline by security regulators in Canada, many cryptocurrency exchanges in the country will now be regulated by national security laws.
- The Canadian Securities Administrators issued a notice to regulators asking them to comply with the framework released in March 2019.
- Canadian crypto legal expert Christine Duhaime stated that the latest move would be an essential step for consumer protection.
According to a new guideline by security regulators in Canada, many cryptocurrency exchanges in the country will now be regulated by national security laws.
The move has reportedly prompted by the changing environment in the crypto industry, which led regulators to clarify the current framework to support Fintech companies in providing better services and innovative products.
Here is what the new guideline means for the crypto community:
The Canadian Securities Administrators issued a notice to regulators asking them to comply with the framework released in March 2019.
The announcement sent out this week means that all crypto assets classified as securities or derivatives will be subject to security laws.
Product and trade on security exchange platforms along with platforms that promote purchased and sale of crypto assets will also be considered under derivatives. The agency, in particular also spoke about the inclusion of platforms that maintain client funds in the new guideline.
However, non-custodial exchange platforms not covered by the security law.
“based on The Canadian Securities Regulatory Agency’s analysis of the trading methods on the trading platform. We noticed that some trading platforms only provide their users with contractual rights or ownership of the underlying crypto assets, rather than immediately delivering native crypto assets to their users. Here In this case, after taking into account all the facts and circumstances, we concluded that these platforms need to be subject to securities regulations,” the CSA said.
This new requirement for instant deliveries expected to bring in a vast majority of Canadian crypto exchange platforms under the scope of regulation.
The agency said, “If crypto assets are delivered immediately, platform users will not face bankruptcy risk, credit risk, fraud risk, performance risk or proficiency risk.”
The announcement welcomed with positive reactions from the stakeholders and analysts of the Canadian crypto industry.
Adam Goldman, founder and president of the Canadian cryptocurrency exchange Bitbuy, was appreciative of the clarification by the agency regarding the March 2019 framework.
He said, “Having a clean regulatory environment will promote the Canadian cryptocurrency industry and provide a clear way forward for cryptocurrency platforms seeking to legally participate in the financial system while protecting Canadians’ rights.”
Thomas Beattie, CEO of Canadian financial services company Voleo also agreed on the approach taken by regulators.
Robert Hockett, a law professor at Cornell University, was pleased with the idea of instant delivery and said difference that Canadian regulators think is important is whether you can immediately receive the underlying assets you want to buy when a transaction occurs, or whether the other party has given you something that you are entitled to in the future.
For some reason, time-span commitments are inherently prone to risk and are speculative. Canadian crypto legal expert Christine Duhaime stated that the latest move would be an essential step for consumer protection.
“Not only that, whether it is a local cryptocurrency exchange operator in Canada, or a U.S. or overseas operator that provides cryptocurrency trading services to Canadian residents, no matter what kind of token they list, they may be subject to the current securities laws,” she added.