The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have published a joint consultation paper and a request for comment, Consultation Paper 21-402 Proposed Framework for Crypto-Asset Trading Platforms (The Consultation Paper), for a sixty-day comment period ending May 15, 2019.
The CSA and IIROC (the regulators) are jointly seeking input from the fintech community regarding a proposed framework for cryptoasset trading platforms. The regulators note that distributed ledger technology (DLT) and cryptoassets, such as bitcoin, while relatively new, are transforming the financial landscape. Although these technologies may have benefits going into the future, they also point out that a series of major incidents regarding the loss and theft of cryptoassets has raised the concern of regulatory bodies around the world.
To that end, the regulators have published a 22-page Consultation Paper that seeks input on a number of areas and will assist them in determining an appropriate regulatory framework for cryptoasset platforms. These considerations include: the addressing of custody and the verification of assets; price determination; market surveillance; systems and business continuity planning; conflicts of interest; cryptoasset insurance; and, clearing and settlement.
Depending on how they operate and the cryptoassets they trade in, the regulators note that cryptoasset platforms may be subject to securities and/or derivatives regulation. The form and structure of these platforms may include features that can pose risks for Canadian investors and the capital markets that may be not fully accounted for by the existing regulatory framework. The regulators are considering what they have termed “a tailored regulatory framework” to address the risks and features posed by cryptoasset platforms.
The staff of CSA and IIROC advise that they will continue to coordinate with regulators in other jurisdictions regarding their approaches to cryptoasset platforms and will welcome their input on a variety of regulatory approaches that exist in this area.
The Consultation Paper is available for download from the website of the participating jurisdictions and of IIROC.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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