The Canadian Securities Administrators (CSA) have published instructions for crypto trading platforms operating in Canada to avoid “advertising and marketing materials that could mislead investors.”
According to CSA chair Louis Morisset, “misleading advertisements and improper marketing strategies may encourage investors to take risks they would otherwise avoid.”
The Canadian authorities’ instructions issued on Thursday caution crypto businesses not to offer “gambling style” incentives in which an investor is enticed to sign up within a set time limit in order to take advantage of a prize or opportunity.
Despite the fact that the guidance on social media posts appeared to be ambiguous, the regulators recommended that trading platforms select a person to examine and authorize communications and put up a mechanism to guarantee that all messages follow regulatory rules.
“Misleading advertisements and improper marketing strategies may encourage investors to take risks they would otherwise avoid, and failing to comply with securities law and IIROC rules may raise questions about a crypto trading platform’s suitability for registration,” said CSA chair Louis Morisset.
Exchanges claiming to be registered under existing securities laws or otherwise approved by regulators were among the seemingly egregious examples supplied by the regulators. Before publishing advertising and marketing statements to the public, the CSA and IIROC advised trading platforms to check with their legal teams.
The IIROC is a self-regulatory organization that recommends measures to safeguard investors and promote healthy domestic capital markets, whereas the CSA is a national standards organization that covers all ten provinces and three territories in Canada.
The two securities regulators have previously made joint comments on rules governing crypto sector participants and collaborated to clarify how crypto can be used in accordance with the country’s securities legislation.