Canada’s Financial Regulatory Proposes Framework for Crypto Exchanges

The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) jointly published a consultation paper on 14 March. 

The consultation paper proposes a framework for cryptocurrency exchanges. The CSA is a financial regulator and IIROC is a non-profit, national self-regulatory organization of Canada.

The Canadian Securities Administrators (CSA) posted on Twitter –

In similar lines to its consultation paper, the CSA submitted a press release. The aim was to seek feedback from the fintech community, industries, market and experts on how the regulations are to be actualized. These measures are for crypto-asset trading platforms operating in Canada.

Andrew J. Kriegler, President and CEO, IIROC stated in the CSA’s press release:

“The emergence of digital and crypto assets continues to be a growing area of interest for regulators, investors and marketplaces – and, together, securities regulators are taking steps to deepen our understanding of this area.”

The paper mentions that innovations like distributed ledger technology (DLT) and crypto assets are comparatively new and are transforming the landscape of the financial industry. Although distributed ledger technology offers few advantages, some of the incidents have revealed their vulnerability to failure and fraud as compared to other assets.

CANADIAN SECURITIES ADMINISTRATORS (CSA) IS PROMOTING INNOVATION THAT BENEFITS INVESTORS AND CAPITAL MARKETS

The paper notes that the CSA has advised Canadians to be careful when buying crypto assets; as there are no platforms identified as an exchange or otherwise authorized to function as a marketplace or dealer in Canada.

The paper also cites that the CSA is attempting to promote innovation that benefits investors and capital markets. CSA is also endeavoring to ensure that it has the relevant tools and understanding to keep pace with evolving markets. 

The feedback by fintech community, market shareholders, industries will help to establish a framework that provides regulatory transparency to crypto exchanges. It creates greater market integrity by incorporating policies, controls, and procedures. Risks to investors like bankruptcy, security, and policies are also addressed.

Financial regulators and authorities across the world are currently examining important issues around the regulation of crypto assets. They are also incorporating the proper regulation of crypto-based platforms.

Recently, Germany’s Federal Ministry of Finance published regulations on public offering of certain cryptocurrency tokens and electronic securities. The report notes that regulatory measures will strengthen the role of the government.

In February, Luxembourg Parliament amended a blockchain bill into law in order to encourage the use of blockchain technology in financial services.