The Ontario Securities Commission (OSC) published a news release on March 8th, 2017 advising businesses that use distributed ledger technologies (“DLT”), such as blockchain, as part of their financial products or service offerings that they may be subject to Ontario securities law requirements. http://www.osc.gov.on.ca/en/NewsEvents_nr_20170308_osc-highlights. The press release provides that some uses of this technology could trigger securities law requirements. According to the OSC:
”Businesses are using DLT in a variety of ways. DLT may be used as the underlying technology in trading, clearing and settling securities. For example, DLT may be used to facilitate issuances of equity and debt securities and to track their ownership. DLT are core to a growing number of new virtual or digital assets. Businesses may also, for example, facilitate initial coin or token offerings where ownership of the coins or tokens is tracked using DLT, or may establish investment funds with DLT-based virtual currencies in their portfolios. Products or other assets that are tracked and traded as part of a distributed ledger may be securities, even if they do not represent shares of a company or ownership of an entity.”
The press release suggests that businesses that are operating or planning to operate a DLT-based venture should consider the different types of offerings that involve securities within the meaning of the Ontario Securities Act; the types of trading activities that will occur; and whether registration as a dealer, adviser and/or
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
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