On March 29, 2021, Canadian securities regulators outlined their regulatory framework for compliance for crypto asset trading platforms (CTPs) in a press release.
The notice provides guidance on securities law requirements applicable to platforms whether trading crypto assets that are securities or derivatives, or contractual rights or claims to underlying crypto assets such as bitcoin or ether. The notice also outlines interim approaches that may be available to CTPs, that are intended to foster innovation and provide flexibility, while ensuring the CTPs operate in an appropriately regulated environment.
We asked our Acting Head of Compliance, Dan Bowering, about the significance of this latest announcement to Multi-Family Offices and wealth management advisors.
Important Disclaimer: The views expressed below are Mr. Bowering's personal views and opinions, and are for educational purposes only. This is not investment advice, and should not be viewed as such.
What is the biggest take away from this announcement?
It clearly sends a message that regulators want a framework for crypto assets in the next two years which includes both licensing and oversight for crypto exchanges. It’s critical for crypto trading exchanges to get licensed with regulators.
Without regulation, there is a proliferation of exchanges because the cost of entry is low, however there isn’t any oversight. With regulation, there will be higher costs to entering the market, however this will come with greater oversight. In turn, there will be greater investor protection and thus greater credibility to the capital markets for which Crypto currencies are a part of. What you’ll probably start seeing are crypto exchanges and potentially big, developed exchanges (such as the Toronto StockExchange) seeking options to buy the best platform available or create their own.
Does this announcement make Cryptocurrencies more legitimate in Canada?
Yes, the announcement lends legitimacy to cryptocurrencies because more people will be offering this class of investment to clients and it will have enhanced oversight. With this new framework, there will be higher levels of accountability which will attract more investors.
What does this mean for the AmiPRO Digital Asset investing platform?
AmiPRO will be working with licensed custodian companies and liquidity providers that are regulated using the CSA’s suggested framework. In turn, this will offer more opportunities for wealth management advisors to invest in cryptocurrencies on behalf of their clients.