The Canadian Securities Administration (CSA) has released new regulatory guidance for cryptocurrency exchanges in the country. This new regulation is to examine if securities legislation applies to any entity that facilitates crypto assets exchanges, both buying and selling cryptocurrencies.
According to the notice released by CSA, this new guidance is a continuation of a proposal it brought forth in the beginning of 2019. The proposal had stated, “If crypto assets that are securities or derivatives are traded on a platform, such a platform would be subjected to securities legislation.”
The latest guidance is to make a clear distinction between trading platforms that make immediate delivery of crypto assets, and those who hold the transaction of crypto assets for a long time.
Understanding the purpose and nature of cryptocurrency exchanges has grown to quite a challenging issue since 2017. It also increased the security vulnerabilities, and several coins and tokens were issued as a way to raise funds.
The new regulation comes as a result of the plentiful ways of cryptocurrency exchange operations that exist in the sector. According to Canadian regulators, all centralized crypto exchanges that provide their service to Canadians, regardless of operating in or outside the country, will have to follow Canadian securities laws.
In August 2019, the State and provincial securities regulators in the U.S. and Canada had jointly launched ‘Operation Cryptosweep’ to regulate fraudulent crypto exchanges. It investigated hundreds of initial coin offerings and crypto-related investment products. As part of the investigation, the team concluded that cryptocurrency investment is one of the major investor threats for 2020.
CSA has also initiated The CSA Regulatory Sandbox, a program to support FinTech businesses to offer innovative products, services, and applications in Canada. This will let businesses register and/or obtain exemptive relief from securities law requirements through an easy and fast application process.
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