Canada has introduced new regulations that severely restrict the cryptocurrency industry in the country, in a bid to protect investors. The country’s regulatory body, the Canadian Securities Association (CSA), has stipulated that all crypto asset trading platforms (CTPs) must register, meet extensive conditions, restrict offers and advertising, and be financially strong enough to ensure the value of cryptocurrencies held by the provider is considered zero. New investor protection rules were put in place due to numerous losses suffered by investors, as a result of many fraudulent and money laundering activities, as well as following the collapse of FTX.
The trading of stablecoins is also under scrutiny, with Canadian authorities keen to clamp down on their trading. Trading in Value-Referenced Crypto Assets (VRCA) that are not fully backed by real, liquid cash reserves is completely prohibited.
Trading in securities requires approval, however, the CSA has not specified exactly what these are, much to the frustration of crypto platforms that are faced with the accompanying risks. US authorities class cryptocurrencies as security, but Canadian authorities view them differently. Various official documents have identified what constitutes securities, including most stablecoins, new issues of cryptocurrencies, staking of cryptocurrencies, virtual things that promise a share in a hoped-for return or value, agreements on the future allocation of virtual coins, virtual coins issued as rewards for advertising, virtual coins advertised as means of payment but not yet widely accepted, and all derivatives of securities.
All CTPs must register with one of the 13 regulatory authorities in Canada, and meet the extensive conditions stipulated. An external survey revealed that CTPs are concerned about rising costs and reduced revenue opportunities. Increased fees and administrative burdens for traders, however, should dissuade some from participating in the crypto market, which is viewed as a positive aspect of Canadian regulation.
