Submitted by nsscadmin on
The broad answer to this question is yes, crypto trading platforms that are considered to be trading in securities must abide by Canadian securities laws.
Earlier this year the CSA and IIROC jointly published Staff Notice 21-329: Guidance for Crypto-Asset trading platforms: Compliance with regulatory requirements. This notice provided guidance on how securities legislation applies to platforms that facilitate or propose to facilitate the trading of crypto assets that are securities, or instruments or contracts involving crypto assets.
In the notice it notes that many crypto-asset trading platforms (CTPs) operate similarly to marketplaces or dealer platforms. Some CTPs may even operate with elements shared by both marketplaces and dealer platforms. Under these situations the existing regulatory requirements that apply to marketplaces and dealer platforms could also apply to CTPs. Because the operations and activities of CTPs can vary the regulatory treatment of one CTP may also differ then the regulatory treatment of another CTP.
CTPs that facilitate the trading of security tokens and/or crypto contracts fall under the jurisdiction of securities regulators and must abide by existing regulatory requirements. CTPs should contact their local securities regulator to discuss how they must comply with securities laws.
Complying with securities laws may include:
- registration with securities regulators;
- registration and membership with IIROC;
- reporting changes in business activities for firms that are already registered.
The category of registration a CTP receives will be determined by how it operates and the activities it allows on its platform. The regulatory treatment may vary from one CTP to another. Canadian securities laws do not apply solely to CTPs based in Canada. Any CTP doing business with Canadians must also abide by securities regulations.
The goal of regulators is to ensure a balance between fostering innovation in the Canadian capital markets and promoting investor protection and fair and efficient capital markets. As the CTP landscape in Canada and beyond evolve and change regulation may change to adapt and maintain this balance. As needed this post will be updated.
**Update, February 7, 2022** The Nova Scotia Securities Commission now has a webpage which lists all registered crypto asset trading platforms. The webpage lists the name of the registered entity, the name they operate under, their category of registration and link to the document which grants them exemptive relief.