Following last year’s QuadrigaCX collapse and loss of client funds, Canada’s crypto exchanges are going the extra mile to rebuild the trust of consumers.
Announced Wednesday, Toronto-based Coinberry has acquired a financial institution bond, a requirement for registration with its provincial securities regulator, the Ontario Securities Commission.
“Every Canadian crypto user remembers Quadriga and the impact of that is still fresh in the back of their minds,” said Coinberry CEO Andrei Poliakov. “People still have to trust exchanges and platforms to use crypto and the investment on Coinberry’s part protects against the corrupt human element that has struck the personal finances of many Canadians.”
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In the U.S., surety bonds of this type, which provide insurance in case of dishonest or fraudulent acts by employees, have been a requirement for crypto firms to be registered with FinCEN for some time.
However, to qualify as a money service business in Canada with its version of FinCEN, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) – with which Coinberry is already registered – does not require a financial institution bond.
In this respect, Poliakov believes “wholeheartedly” that Coinberry is the first crypto firm to go the extra mile.
“We applied for registration with the OSC and we’ve been going through that process for quite some time,” said Poliakov. “One of the requirements was to have our financial statements publicly audited, by MNP in this case, and another requirement was to have a financial institution bond in place.”
Coinberry’s surety bond is underwritten by the Lloyd’s of London insurance market and the coverage limit is CAD$1,000,000 ($764,000) per claim/incident, said Poliakov.
Neither Lloyd’s nor the OSC returned requests for comment by press time.
There may well be other crypto firms in the process of going through the registration process with the OSC, Poliakov said, adding that a general clampdown when it comes to crypto compliance has seen Ontario regulators blocking firms that don’t play ball. Last week, BitMEX was blocked from serving Ontario-based customers.
“I cannot speak to whether the others in Canada are in the process of getting this,” Poliakov said in a follow-up email. “I do know some platforms are not applying at all, while others (like BitMEX) have already received instructions from the OSC to cease operation in Ontario because they are not going the registration route.”