Released by the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC), consultation paper 21-402 seeks feedback from the fintech community, market participants, investors and other stakeholders on the tailoring of regulations for Canada-based platforms engaging in securities laws – as stated in its introduction.
“We intend to use this feedback to establish a framework that provides regulatory clarity to Platforms, addresses risks to investors and creates greater market integrity,” it reads.
The paper notes that while some crypto assets “are not currently in and of themselves, securities or derivatives,” securities regulations may still apply to platforms “that offer trading of crypto assets that are commodities, because the investor’s contractual right to the crypto asset may constitute a security or derivative.”
The paper then lists the facts it considers when establishing whether a crypto asset constitutes a security or derivative and, in the spirit of consultation, asks what other factors should be considered.
Further on, the authors name the key risks associated with crypto assets platforms, such as insufficient safeguards, inadequate information about the assets available for trading as well as the platforms and potential for manipulation and deceit, amongst others, and present examples of regulatory approach to crypto assets in other jurisdictions, namely the US, Europe and Hong Kong.
The document goes to request feedback on a number of issues fundamental to the new proposed platform framework, including those of custody and verification of assets, price determination, surveillance of trading activities and systems and business continuity planning, with specific questions attached to each issue discussed.
Comments to the paper may be submitted within the May 15, 2019 deadline.