The Canadian Securities Administrators (CSA) have established a set of rules that must be followed by all platforms offering crypto trading in order to protect their residents from crypto-related financial risks. The global crypto community is trying to weather a major shock following the demise of crypto exchange FTX last month. As part of those rules, Canada has imposed a ban on crypto exchanges offering “margin or leverage trading” to residents of the country.
Margin trading allows users to borrow funds from an exchange and make a trade with it. This allows traders to invest more than they have crypto assetswhich may or may not lead to profitable results.
Canada will soon set a deadline for unregistered crypto companies to disclose their details and file a Pre-Registration Statement (PRU) with the Financial Regulator.
Companies must vouch for compliance with Canadian law. The CSA has further clarified that international exchanges open to Canadians must also comply with these rules as part of securities regulation.
“Crypto Trading Platforms by committing to comply with enhanced terms and conditions, which include, among other things, requirements to hold Canadian clients’ assets with an appropriate custodian and to segregate those assets from the platform’s proprietary trading and a prohibition on offering margin or leverage to any Canadian client.” the official statement read from the CSA.
Crypto firms must select custodians to hold Canadian clients’ assets. The custodians must be regulated by a financial regulator in Canada, the United States or similar jurisdiction.
“Following recent events in the crypto market, the CSA is strengthening its approach to oversight of crypto trading platforms by expanding existing requirements for Canadian-operated platforms. Crypto assets or financial products may also be related to the adoption of these measures crypto assets are risky investments. Canadian investors are urged to exercise caution and consider seeking advice from a registered investment advisor before investing in crypto,” the statement added.
Canada is also currently closely examining the role of stablecoins in his market.
In a recent survey, Canada’s Ontario Securities Commission said that 13 percent of Canadians currently own digital assets such as cryptocurrency or non-fungible tokens (NFTs).
