Canadian umbrella financial regulator, the CSA (Canadian Securities Administrators) recently decided to create a new set of rules for crypto exchanges operating in the country, according to two unnamed sources familiar with the matter. Among the new changes is apparently the rule that all crypto trading platforms that wish to operate in the country must be registered, and everyone seeking registration must sign undertakings to comply with investor protections.
The CSA (Canadian Securities Administrators) declined to reveal any details, saying it would do so “in the near future.”
— DustyBC Crypto (@TheDustyBC) February 17, 2023
However, this is not the end of it, as the rules will also severely affect retail investors who wish to trade cryptocurrencies using leveraged bets.
The CSA plan is to increase its oversight of crypto exchanges that operate in Canada. This will mean tighter rules which, according to the sources, could potentially ruin the crypto industry in the country. With the ban on margin and leveraged trading, it is becoming more and more clear that this could actually happen.
In addition, the proposal will prevent cryptocurrency providers from accepting payments made with credit cards while making it a requirement for hem to keep user assets segregated from their own funds. On top of that, the measures also contain suggestions that say that providers must be forced to hold all assets from Canadian users “with an appropriate custodian and segregate these assets from the platform’s proprietary business.”
Crypto exchanges must register or leave
As mentioned, crypto exchanges will have to register in order to keep operating in the country. However, they will also have to give their primary regulator a pre-registration undertaking in order to keep operating during the period of application processing. By doing this, the exchange commits to getting registered, and it acknowledges that its platform will be bound by terms and conditions meant to protect investors.
If the exchange cannot file an undertaking, or it refuses or is incapable of adhering to the requirements, the regulator keeps the right to seek legal action, according to the sources.
So far, the CSA has warned that it has reached out to crypto exchanges and notified them that they are obligated to initiate a registration process, as there are many platforms operating in Canada that are still unregistered. It also notified them that they would face enforcement action if they did not start the procedure, which included temporary orders.
Canada has already seen the start of a nation-wide crackdown on unregulated exchanges, and some platforms, such as Binance, have informed the regulator that they would stop accepting new users. It would seem that Binannce will opt out of the country rather than change its business enough to comply with the securities laws. On the other hand, it also doesn’t intend to face regulatory scrutiny, so leaving Canada is its only remaining option.
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