There is less than one month left for the financial technology (fintech) community, market participants, investors and other stakeholders to provide feedback to the Canadian Securities Administrators ("CSA") and the Investment Industry Regulatory Organization of Canada ("IIROC") on how requirements may be tailored for platforms that facilitate the buying and selling or transferring of crypto assets ("Platforms") operating in Canada whose operations engage securities law. On March 15, 2019 the CSA and IIROC jointly published a consultation paper (the "Consultation Paper", a copy of which is available here) seeking input on a number of areas that will assist in determining appropriate requirements for Platforms operating in Canada including how to address custody and verification of assets, price determination, market surveillance, systems and business continuity planning, conflicts of interest, crypto-asset insurance, and clearing and settlement. The CSA/IIROC intend to use this feedback to establish a framework that provides regulatory clarity to Platforms, addresses risks to investors and creates greater market integrity.
The emergence of “digital assets” or “crypto assets” continues to be a growing area of interest for regulators globally as new innovations like distributed ledger technology and crypto assets transform the landscape of the financial industry. Although distributed ledger technology may provide benefits, global incidents like the collapse of the QuadrigaCX digital currency exchange point to crypto assets having heightened risks related to loss and theft as compared to other assets.
Platforms, depending on how they operate and the crypto assets they make available for trading, may be subject to securities and/or derivatives regulation. Depending on their structure, they may also introduce novel features that create risks to investors and Canada’s capital markets that may not be fully addressed by the existing regulatory framework. Where securities legislation applies to platforms, the CSA and IIROC are considering a tailored regulatory framework to address these novel features and risks.
The fintech community and other market participants has until May 15th, 2019 to provide written submissions to IIROC and all members of the CSA.
Endeavor Law can assist the fintech community and other market participants with Canadian securities law compliance and regulatory matters. Endeavor Law will always seek to provide competitive pricing for any legal services requested and is pleased to discuss fee arrangements that suit any potential client.
Does not constitute legal or other advice and must not be used as a substitute for legal advice from a qualified legal professional in your jurisdiction who has been fully informed of your specific circumstances. Information may not be up-dated subsequent to its initial publication and may therefore be out of date at the time it is read or viewed. Always consult a qualified legal professional in your jurisdiction.