- In recent months, Canada has pursued a tightened cryptocurrency exchange regime.
- The Securities Regulator of Ontario issued their first round of crypto platform approvals.
- Notably, the stablecoin Tether trade was banned by these approval notes (USDT).
According to regulatory documents issued in recent weeks, the Ontario Securities Commission has blocked a couple of trading platforms that offer crypto services to Tether.
Both Wealthsimple and Coinberry, based in Toronto, are the first enterprises of their kind to be able to operate within a regulated setting with regulatory requirements tailored for the operations of the crypto-assets.
platforms under the term ‘interim, temporary registry framework.’
Yet such approvals seem to be limited to a number of approved cryptocurrencies, named in particular Bitcoin, ether, bitcoin and litecoin.
Tether is the only digital asset named “Prohibited Crypto Assets” in the appendix.
Christine Duhaime, a Canadian lawyer who specializes in financial technologies, told The Block that “with respect to Tether and Bitfinex, the report by the New York AG likely did not provide comfort to the securities regulators and in the eyes of a government regulator, is likely going to be viewed as high-risk.”
“Until some digital currency companies tie themselves to a jurisdiction with transparency and where digital currency holders have rights they can exercise if things go awry, I suspect that they won’t be permitted to operate in mature regulatory jurisdictions,” Duhaime continued.
“We currently do not plan to introduce new rules specifically for platforms, since platforms already have existing securities law requirements in Canada. Rather, existing securities legislation requirements can be adjusted, as appropriate, by terms and conditions for registering or recognising [cryptocurrency trade platforms] and, with the necessary conditions, by the discretionary exemption.
Christine Duhaime, a Canadian lawyer specialising in financial technologies, said to The Block that “The New York AG report was probably uncomfortable for securities regulators and the eye regarding Tether and Bitfinex “
“Before certain digital monetary undertakings have a transparency jurisdiction where they can exercise the rights of digital currency holders if matters go awry, I suspect they will not be allowed to operate in mature regulatory jurisdictions,” said Mr Duhaime.
Tether, which issues US DT, resolved a lawsuit against the Attorney General at New York in February that prevented the stablecoin operator from conducting business in New York. Despite the continued increases in disclosures, Tether is reportedly confronted with continuing regulatory challenges.
The broader landscape of regulation
As previously reported by Block, the securities regulator of Canada, and in particular the Ontario Securities Commission, has been working hard to implement a new principle of de facto securities offered on exchanges holding cryptography even when they do not own securities.
The “crypto contracts,” that is to say the contracts between platform and user, require risk disclosures that are more consistent with the securities trade.
Wealthsimple was the only crypto-trade platform identified by the OSC as fully registered prior to closer monitoring. Coinberry was the only crypto exchange that reported before a deadline in April to the Ontario Securities Commission and after that, the OSC began to take legal actions to expel other crypto exchanges.
Simple wealth is an online brokerage platform for users to obtain crypto price exposure. Users cannot remove crypto, similar to Robinhood. Coinberry is rather a traditional exchange of cryptocurrency which makes withdrawals possible.
The company “the first pure-play crypto trading platform in Canada to be fully registered” is a Coinberry representative who sent it to The Block. After these two years, the company did not reply to a question concerning the regulatory regime.