According to recent reports, the Canadian Securities Administrators (CSA) has released the new Canadian rules for crypto trading platforms leaving little room for stablecoins. The administrators have tightened registration requirements for crypto exchanges for the second time after the disorder seen in 2022.
CSA expectations from crypto asset trading platforms
On Feb 22, 2023, CSA, also known as The Canadian Securities Administrators, published a notice describing what they expect from crypto asset trading platforms seeking registration in Canada. The CTPs will enter into a new version of PRUs, which are legally binding documents. Their principal regulators will contact registered CTPs about compliance with the new expectations.
The CSA wrote that the new commitments represent investor protection in light of the recent CTP and insolvencies that occurred in 2022. The new commitments touch on issues that include segregation of assets, leverage, determination of capital, transparency and others. The notice said that there is a prohibition on the part of CTP in respect of clients buying or depositing stablecoins through crypto contacts without the prior written consent of the CSA.
CSA would not expect to provide consent for algo stablecoins
As you know, Canadian Securities Administrators have released a notice explaining the new Canadian rules for crypto trading platforms leaving little room for stablecoins. The notice also explained that CTPs are prohibited from permitting Canadian clients to enter into crypto contracts to buy and sell any crypto assets that are security or derivative.
Staff believe that the Fiat-Backed Crypto Assets generally meet the definition of security and would meet the definition of another term, “derivative”, in some jurisdictions. The CSA also mentioned that they are not willing to provide consent for other types of stablecoins, such as algo stablecoin.
Nonetheless, expectations can be made in writing by the administrators. The notice said that they recognise VCRAs as an on-ramp to deposit assets with the CTP, for the trading of other crypto assets, as a store of value during times of volatility in the crypto assets markets, or to avoid converting their crypto assets into fiat currencies as a means of payment. Coinsquare, a registered and popular crypto trading platform in Canada, listed USD coins and DAI stablecoins among its 40 offers by the time of writing.
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