Canadian securities regulators have been on crypto companies’ tail for some time now. In June, the Ontario Securities Commission served Binance with an investigation order—in an attempt to see whether the world’s largest crypto exchange tried to skirt round securities law.
Days later, Binance announced it was shutting shop in Canada, citing “new guidance related to stablecoins and investor limits.” Prior to that, crypto trading platform Bybit and OKX had announced they were winding down operations in Canada due to “new regulations.”
Canada’s relaxed stablecoin rules
As crypto companies continue to scratch their heads over having to comply with the country’s new crypto rules, the Canadian Securities Association (CSA) has issued a clarification to exchanges and crypto issuers—saying it may allow trading of what it refers to as value-referenced crypto assets (VRCAs), which includes stablecoins.
In a statement released Thursday, the CSA said it is contemplating allowing trading of certain cryptocurrencies that peg their market value to a single fiat currency. In February, the CSA banned trading platforms from allowing users to buy or deposit stablecoins without its prior written consent, saying they “may constitute securities and/or derivatives.”
Also read: US House Committee passes another landmark Crypto bill for Stablecoins and self-custody
Now, the CSA says it may allow trading of those assets on the condition that issuers maintain an adequate reserve of assets with a licensed custodian, and crypto trading platforms offering stablecoins disclose publicly “certain information related to governance, operations, and reserve assets.”
“This interim framework, which we will build upon in the future, sets certain standards to help ensure that investors receive the information they need about the assets they are purchasing, including the risks associated with them,” said Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission.
Concerns about fiat-backed crypto assets still loom
Even the fiat-backed digital assets meeting the terms and conditions are fraught with risks, and therefore, should not be viewed or endorsed as risk-free, the CSA warned the investors. Notably, stablecoins have been getting hammered over the last 18 months, with their market capitalization falling to $123 billion.
Even as some crypto companies have been getting the heebie-jeebies due to tightened regulations, Canada remains a go-to destination for many others due to its favorable regulatory environment. The Bank of Canada is also gearing up to introduce a central bank digital currency (CBDC). However, the gargantuan task of designing an inclusive CBDC has many challenges.
