Canada’s crypto industry is on high alert. A looming deadline demands that trading platforms transform into fully regulated investment dealers or face the consequences.
In top cryptocurrency news today, crypto trading platforms (CTPs) operating in Canada are under increasing pressure to comply with stringent regulatory standards.
A recent announcement from the Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) has underscored the impending deadline for these platforms to transition into fully-fledged investment dealers.
Initially granted a temporary operating license in March 2021, CTPs have been given a grace period to align their operations with the regulatory framework. However, this period is nearing its end, and platforms must now seek full membership with CIRO and adhere to its regulations.
“Given the time that has passed, CSA members expect CTPs to have carefully reviewed and understood the requirements to become investment dealers and CIRO members, and be actively engaged with CIRO on their applications.”
The CSA expects CTPs to have a comprehensive understanding of the investment dealer and CIRO membership requirements, actively engaging with the organization to expedite their applications.
New entrants to the crypto trading space will not benefit from a similar transitional period. Currently, there are 15 CTPs operating in Canada, each required to register in individual jurisdictions.
Coinsquare, a pioneering Canadian crypto exchange, has successfully navigated this regulatory landscape, becoming the first CTP to achieve membership with the Investment Industry Regulatory Organization of Canada (IIROC), CIRO’s predecessor.
Canada’s regulatory stance on crypto has evolved rapidly. Since August 2022, the CSA has implemented pre-registration requirements for CTPs, initially focusing on customer protection measures. In response to market instability and the collapse of certain crypto firms, these regulations were tightened in February 2023, with a particular emphasis on stablecoin oversight.
The industry has responded variedly to these regulatory changes. While some platforms, like Kraken and Gemini, have swiftly adapted, others, including OKX, dYdX, Paxos, ByBit, and Binance, have chosen to exit the Canadian market.
The regulatory framework continues to expand. In July 2023, the CSA introduced guidelines for investment firms holding crypto assets, followed by a more comprehensive proposal in January. Additionally, Canada has embraced the digital asset market with the approval of spot Bitcoin exchange-traded funds since 2021.
As the deadline looms, the crypto industry in Canada faces a pivotal moment, with the potential for significant consolidation and transformation in the market.
