• Canada likely to tighten rules for crypto exchanges
• Updated pre-registration obligations for crypto trading platforms
• New compliance obligations prohibit trading on margin and leverage, among other things
As crypto news site Coindesk has learned from insiders, Canada’s securities regulator is expected to tighten rules for crypto exchanges doing business in the country later this February. Back in August 2022, the Canadian Securities Administrators (CSA) announced that they expect certain compliance obligations from unregistered crypto exchanges when seeking registration in Canada. These commitments should take the form of a pre-registration commitment (PRU), according to the CSA’s website. The terms and conditions corresponded to the requirements currently applicable to registered platforms. However, in light of “recent events in the crypto market,” the CSA is now stepping up its oversight of crypto trading platforms by expanding existing requirements for platforms operated or available in Canada.
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New obligations for all crypto trading platforms
To better protect crypto investors, the Canadian Securities Administrators – the council of provincial and territorial securities regulators that coordinates and harmonises regulation of Canada’s capital markets – will update their approach, the CSA’s website said back in December. For this purpose, the pre-registration obligations will be expanded and already registered crypto trading platforms will also be contacted to discuss compliance with the extended terms and conditions. Thus, all crypto exchanges that want to do business and offer services in Canada or are already doing so are affected by the new rules.
It is not yet entirely clear what the exact obligations will be that all crypto exchanges in Canada will have to submit to in the future. The CSA writes on its website that “among other things” it is required that the platforms must strictly separate the assets of Canadian customers from their own business and keep them with suitable custodians. Crypto exchanges will also be banned from offering trading on margin or leverage to Canadian clients. According to “FinanceFeeds”, crypto exchanges in Canada will soon no longer be able to accept payments by credit card.
“The CSA will publish more details on this updated approach in the future,” the supervisors wrote in December 2022. According to insiders, “Coindesk” claims this will happen in February. Then the platforms should also be given a deadline by which they have to implement the new conditions.
Insider: Canada is destroying its crypto industry
According to Coindesk, industry players are not very enthusiastic about the expected rule changes in Canada. “This [Aktualisierung der PRU] was primarily driven by the Ontario Securities Commission and will destroy the Canadian crypto industry overnight as it completely changes the rules and structure set by the CSA itself and makes it just too expensive to do business in Canada An insider who wished to remain anonymous told the news outlet Industry players are particularly concerned about the need to obtain individual approvals from key regulators in different territories going forward, as some of Canada’s alternative trading marketplace rules are not translated into others, Coindesk said Legal systems are transferrable, which is why such demands are perceived as “annoying”.
The coming days and weeks will probably show how the CSA will actually adapt its rules for crypto exchanges and whether this will result in the companies concerned migrating from the North American country.
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