The Canadian Securities Administrators (CSA) unveiled proposed amendments to regulations governing the treatment of crypto assets by public investment funds on January 18.
![CSA Proposes Amendments to Crypto Assets Investment Fund](https://i0.wp.com/coinscreed.com/akoakris/2024/01/image-84.png?resize=1024%2C462&ssl=1)
In addition to establishing standards for custodianship, the proposed amendments currently under contemplation would restrict the crypto-related activities of public investment funds.
The amendments would restrict crypto assets’ direct purchase, sale, and holding to alternative investment funds and non-redeemable investment funds only. Other mutual funds could only invest in those funds to gain cryptocurrency exposure.
Invested assets must meet the following requirements: they must be fungible and listed on an exchange recognized by a securities regulatory authority in Canada.
Furthermore, it would be mandatory to insure and store assets in refrigerated wallets. It is compulsory to have a public accountant conduct an annual evaluation of the internal administration of the custodian.
The alterations will be integrated into the Companion Policy and National Instrument 81-102 Investment Funds that are associated with it. A national instrument is a regulation or order that has received the official endorsement of every province and territory in Canada.
The codification of securities regulations in national instruments is a common practice, given that the CSA coordinates provincial regulations on securities. As stated by the CSA:
“We think this [greater regulatory clarity] can facilitate new product development in the space while also ensuring that appropriate risk mitigation measures are built directly into the investment fund regulatory framework.”
The amendments are a component of a July-announced initiative. A consultation paper and deliberation on a more comprehensive regulatory framework for cryptocurrencies will ensue after the proposals have been subject to public comment for 90 days.
Spot Bitcoin exchange-traded funds have been available in Canada since 2021.