On Feb. 22, CSA issued notice on enhanced crypto platform oversight.
CSA NBW, CSA ALB, CSA BC, and CSA OSC issued notice describing enhanced investor protection commitments it expects from Crypto asset trading platforms (CTPs).
Follows CSA Dec. 12, 2022 notice on enhanced oversight of CTPs, see rule #145702.
Enhanced Investor Protections
Introduced new investor protections into standard Pre-registration undertaking (PRU)
CTPs must provide enhanced PRU to continue operations while applying for registration with securities regulators to their principal regulator within 30 days of this notice.
Pre-registrations must include enhanced expectation re custody and segregation of client assets, and prohibition on offering margin, credit, or other forms of leverage.
Process will also prohibit CTPs from permitting clients to purchase or deposit value-referenced crypto assets (stablecoins), proprietary tokens without prior CSA consent.
Enhanced commitment to retain qualified CCO during the pre-registration process.
If a CTP is unable to provide pre-registration undertakings, it must begin the process to off-board any Canadian users, and restrict them from accessing products/services.
Also issued reminder that crypto assets are volatile and directed users to platforms registered with the CSA and info on fundamentals of crypto assets before investing.
Required Actions
CTPs must give revised PRU based on CSA template within 30 days of this notice.
Implement necessary systems changes to give effect to the provisions of the PRU.
On same day, CSA OSC and CSA Queissued notices re CTP enhanced commitments.
Feb. 2023 CSA NVS Notice
On Feb. 22, 2023, CSA NVS also issued notice on enhanced crypto platform oversight.
Apr. 2023 CSA Pre-Registration Update
On Apr. 12, 2023, CSA announced that certain unregistered crypto asset trading platforms filed enhanced pre-registration undertaking with their principal regulator.
Pre-registration undertakings that have been reviewed are available on CSA website.
Apr. 21, 2023 Editorial Update
On Apr. 21, 2023, Reg-Track made an editorial update to include related content link.
Oct. 5, 2023 Staff Notice 21-333
On Oct. 5, 2023, CSA and CSA NBW announced CSA staff notice 21-333 providing clarification on the interim approach to Value-referenced crypto assets (VRCA).
Sets out interim terms/conditions for crypto asset trading platforms and issuers of fiat-backed crypto assets to continue allowing Canadian clients to purchase or deposit.
Interim approach requires issuer of asset must maintain an appropriate reserve of assets with a qualified custodian, held for the benefit of the crypto asset holder.
Also governance, operations, reserve of assets information made publicly available.
Cautions that value-referenced crypto assets and fiat-backed crypto assets that satisfy interim conditions, are subject to various risks and not the same as fiat currency.
Asset that satisfies these interim terms and conditions should not be viewed as an endorsement or approval of the asset, nor indication that the asset is risk-free.
Interim approach outlined does not apply to VRCAs that are not FBCAs, nor to any new VRCA that a CTP may offer at a date after the publication date of CSA 21-332.
On Apr. 17, 2024, CSA ALB reported Apr. 30 deadline was extended to Oct. 31, 2024.
Notice 21-333 set out interim terms and conditions for CSA to consent to registered CTPs to continue allowing clients to buy/deposit/enter into crypto contracts or VRCAs.
Staff notice also included a deadline of Apr. 30, 2024; by this date, CSA expected that CTPs would no longer allow contracts that do not comply with the interim terms.
On Sep. 26, 2024, CSA OSC reported Oct. 31, 2024 deadline was extended to Dec. 31.
Extension intended to provide more time for CTPs to comply with terms and conditions of registration and exemptive relief decisions, or their PRUs, or to propose alternatives.
As long as any alternatives in place or substantially finalized prior to Dec. 31, 2024.
