The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) are reminding crypto trading platforms (CTPs) to ensure their operations comply with Canadian securities laws by prioritizing their applications for registration as investment dealers and membership with CIRO.
Under the terms of Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements (the Staff Notice), which was published in March 2021, CTPs that trade in either: a) crypto assets that are securities or derivatives, or b) instruments or contracts, based on crypto assets, that are securities or derivatives, are expected to register as investment dealers and become members of CIRO, the regulatory body intended to oversee this type of activity.
As outlined in the Staff Notice, CSA Staff contemplated an interim approach, which allowed CTPs to operate as restricted dealers in an appropriately regulated environment for a two-year period while working toward obtaining CIRO membership (the Interim Approach). During this time, CTPs were expected to seek registration as investment dealers and membership with CIRO.
Given that the two-year period has passed, CSA Staff expect CTPs by this time to have carefully reviewed and understood the requirements to become investment dealers and CIRO members and be actively engaged with CIRO on their applications.
As CSA Staff warn they do not intend to continue the Interim Approach as described in the Staff Notice, they advise that CTPs which have been working towards registration and CIRO membership should contact the CSA member in their participating jurisdiction to discuss appropriate next steps.
Staff Notice 21-329 Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements (the Staff Notice) is available for download from the websites of the participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
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