Canadian Regulatory Bodies Encourage Crypto Sector to Partake in Securities Law Review
The regulatory agencies in Canada are currently reviewing their existing securities laws in an attempt to accommodate the emergence of cryptocurrencies. The report will help them determine the best course of action to take for digital assets by boosting innovation in the new sector while also protecting investors. However, the regulatory bodies are calling on the crypto industry in Canada to participate in the review of the existing securities laws as well so that their point of view and input is incorporated into new laws and policies as well.
Regulatory bodies issue a consultation paper
Two regulatory authorities in Canada published a joint consultation paper on March 14, with the hope of receiving feedback from the cryptocurrency industry regarding the regulation of tokens. The Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) issued a press release regarding the paper, where they stated that it is imperative for them to review existing securities laws to cope with the emergence of cryptocurrency exchanges and other platforms and technologies dedicated to digital assets.
The CSA is a national regulatory body that currently checks the standards of 57 different sectors, while the IIROC is a self-regulatory group in charge of monitoring investment dealers and trading platforms.
CSA Chair Louis Morisset, who is also the CEO and President of the Autorité des Marchés Financiers, in his comment stated the following:
“This consultation outlines a proposed regulatory framework that provides clarity for platforms, greater market integrity, and protection for investors. Platforms have told us that a tailored regulatory framework is welcome as they seek to build consumer confidence and expand their businesses across Canada and globally.”
Over the past few months, regulators in most countries around the globe have been focused on reviewing their existing securities laws or creating new ones to accommodate the emergence of the digital asset market. The consultation paper by the Canadian regulators shows an intent on their part to properly regulate the industry in light of recent events.
Canada had previously maintained a reserved stance regarding cryptocurrencies. However, this latest documentation shows that they are looking to change their position to boost innovation in the digital asset space and protect local investors from losing their funds.
The CSA and the IIROC will consult with several industry participants, including crypto companies, the fintech community, investors, and market enthusiasts. IIROC president and CEO Andrew J. Kriegler stated that the emergence of cryptocurrencies and other digital assets continues to be areas that they have shown interest in over the past few months. By working together, the securities regulators are taking the necessary steps to further understand this emerging sector and create adaptive and comprehensive regulations.
He urged the Canadian government to adapt to innovation and technology and provide clarity to the cryptocurrency market regarding the regulatory requirements needed to work in the new sector. The regulatory requirements would be designed and explicitly applied to the emerging technology, while also ensuring that investors are adequately protected.
The press release noted the following:
“The consultation paper seeks input on a number of areas that will assist in determining appropriate requirements for platforms. These include how to address custody and verification of assets, price determination, market surveillance, systems and business continuity planning, conflicts of interest, crypto-asset insurance, and clearing and settlement.”
The QuadrigaCX scandal – A dent in the crypto sector
Canadian regulators are pushing for comprehensive regulations in the cryptocurrency sector in light of the recent scandal involving a local crypto exchange, QuadrigaCX, which owes its users roughly $190 million following the untimely death of its owner.
The CEO of the crypto exchange died in December last year, with customer funds ending up being inaccessible after it was revealed that he was the only one with the private keys to their cold storage wallet. The government is currently working to retrieve the funds, with Big Four auditor EY presently tasked with managing the company’s financials.