On March 29, 2021, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published a Notice to provide guidance on how securities legislation applies to platforms (Crypto Asset Trading Platforms) that facilitate or propose to facilitate the trading of:
- crypto assets that are securities (Security Tokens), or
- instruments or contracts involving crypto assets (Crypto Contracts).
The Notice does not introduce new rules specifically applicable to Crypto Asset Trading Platforms; rather, it provides guidance on how the existing requirements of securities legislation may be tailored through terms and conditions on the registration or recognition of Crypto Asset Trading Platforms and through discretionary exemptive relief with appropriate conditions.
This Notice discusses Crypto Asset Trading Platforms that operate in a manner similar to marketplaces and other Crypto Asset Trading Platforms that are in the business of trading Security Tokens or Crypto Contracts that are not marketplaces but are dealers.
In some situations, a Crypto Asset Trading Platform may be carrying out activities that have elements of both marketplaces and dealers. The Notice sets out how existing regulatory requirements could apply to these Crypto Asset Trading Platforms.
The Notice focuses on Crypto Asset Trading Platforms that facilitate the trading of Security Tokens and/or Crypto Contracts. There may be platforms that facilitate the trading of other products or contracts that are structured as “traditional” derivatives and that also provide exposure to crypto assets (including commodity futures contracts, contracts for difference or swaps).
In the Notice, the CSA and IIROC encourage market participants to consult with their legal counsel and to contact staff of their local securities regulatory authority on the appropriate steps to comply with securities legislation and IIROC rules.
The Notice warns that securities commissions may take new enforcement actions or continue existing actions against Crypto Asset Trading Platforms that do not and/or have not complied with Canadian securities legislation.
For a copy of the Notice: https://www.iiroc.ca/Documents/2021/12d84d32-7a4b-4f81-b864-cb65f5ffd93b_en.pdf
For more information, please call Barbara Hendrickson at BAX Securities Law (647) 403-4606.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.
