Crypto platforms applying for registration in Canada will have to agree to tighter rules, including a ban on margin and leverage trading.
In the wake of the FTX crash and the spreading contagion, Canadian authorities are taking steps to better protect Canadian cryptocurrency investors. On December 13, the Canadian Securities Administrators (CSA), a council of the country’s provincial and territorial securities regulators, released an update for the country’s crypto trading platforms.
The CSA claimed that by enlarging current standards, the organization has been strengthening its strategy for overseeing crypto trading platforms. The announcement states that the newly enhanced restrictions, which prohibit them from providing margin or leverage trading services to any Canadian clients, must be complied with by any cryptocurrency trading firms operating in Canada, both domestic and foreign ones.
Additionally, the increased terms mandate that Canadian providers of cryptocurrency exchange services separate their custody assets from the platform’s unique business. The CSA noted in the statement:
“Custodians will generally be considered qualified if they are regulated by a financial regulator in Canada, the U.S., or a similar jurisdiction with a supervisory regime for conduct and financial regulation,”
The council urged investors to only invest via a platform that is registered with CSA members, highlighting the fact that even after the implementation of these regulations, crypto assets or any financial products related to them are high-risk investments.
The CSA made reference to its prior communication from August 15, 2022, to Canadian-based cryptocurrency trading platforms in the current announcement.
The regulator noted that it anticipated pre-registration undertakings from unregistered cryptocurrency trading platforms operating in Canada while they pursue registration.
The CSA notification arrived soon after FTX and Bitvo, a Canadian cryptocurrency platform, agreed to sell each other their businesses in June 2022. FTX initially intended to use the acquisition as a component of its aspirations for international growth.
But Bitvo eventually succeeded in stopping the acquisition by the now-defunct exchange, enabling the company to carry on long after FTX’s demise. The transaction wasn’t finalized because the companies were striving to meet the closing conditions, the most important of which was regulatory permission from the Alberta Securities Commission, Bitvo CEO Pamela Draper stated in November.
