Canadian regulators seek to introduce regulatory framework for crypto-asset trading platforms

The Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) have published a joint consultation paper on the regulatory framework for crypto-asset trading platforms.

The joint Consultation Paper 21-402 “Proposed Framework for Crypto-Asset Trading Platforms” is seeking inputs from the fintech community, market participants, investors and other stakeholders on how regulatory requirements could be tailored for crypto-asset trading platforms operating in the country.

The key focus areas include 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.

“This consultation outlines a proposed regulatory framework that provides clarity for platforms, greater market integrity and protection for investors,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Platforms have told us that a tailored regulatory framework is welcome as they seek to build consumer confidence and expand their businesses across Canada and globally.”

The CSA and IIROC noted that depending on how these platforms operate and the crypto assets they support, they may be subject to securities and/or derivatives regulation. They emphasized that the structure of these platforms may introduce such features that pose 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 release said.

The last day to submit the comments is May 15, 2019.