- Canadian regulatory authority announced clearer guidelines for crypto asset issuers.
- The CSA maintains that value-referenced assets may constitute Securities and/or derivatives.
- Regulators caution investors of risks associated with crypto assets.
The global expansion of the cryptocurrency industry has prompted regulatory authorities worldwide to set measures that effectively oversee the fast-growing space.
In response to this growing demand, Canada has stepped up its regulatory efforts with new interim guidelines to provide clarity and guidance to crypto assets issuers and investors.
New Approach to Value-Referenced Crypto Assets
On October 5th, The Canadian Securities Administrators (CSA) announced clearer regulations aimed at guiding the trading of value-referenced crypto assets such as stablecoins.
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The CSA stated that some crypto assets may serve specific purposes to Canadian investors, and the new framework will provide access to information and protection to ensure transparency and accountability within the industry.
While maintaining its stance that trading value-referenced crypto assets that constitute securities or derivatives is prohibited within Canada, the regulatory body indicated its willingness to permit the continued trading of certain assets tied to the value of a single fiat currency, subject to specific terms and conditions.
Interim Terms And Conditions
The new approach will apply to crypto asset trading platforms and the issuers of fiat-backed crypto assets if they wish to continue serving Canadian clients.
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The conditions require issuers of value-referenced crypto assets to maintain an appropriate reserve of assets with a qualified custodian to ensure the benefit of crypto asset holders. Additionally, asset issuers must make necessary information related to governance, operations, and asset reserves publicly available.
CSA Chair and CEO of the Alberta Securities Commission, Stan Magidson, stated that “This interim framework, which we will build upon in the future, sets certain standards to help ensure that investors receive the information they need about the assets they are purchasing, including the risks associated with them.”
The CSA cautions Canadians that these assets are not equivalent to fiat currency, even if they satisfy the terms and conditions. They carry inherent risks, and compliance with these terms should not be interpreted as an endorsement or guarantee of the asset’s safety.
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