Ontario Securities Regulator Issues Warning About ICOs

Ontario's securities market watchdog has issued a warning to businesses using blockchain tech: you may run afoul of our laws.

AccessTimeIconMar 9, 2017 at 6:52 p.m. UTC
Updated Sep 11, 2021 at 1:08 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Ontario's securities market watchdog has issued a warning to businesses using blockchain: you may run afoul of our laws.

, the Ontario Securities Commission (OSC) said on 8th March that the province's laws may apply in some cases, advising companies that use or are looking to utilize the tech to get in touch with the regulator if they have any doubts.

The OSC made specific references to initial coin offerings, or ICOs, through which companies or individuals can issue and sell blockchain-based tokens in order to fund or bootstrap a new project. The model's supporters say that it represents a wholly new mechanism for entrepreneurs to access capital, while critics argue that it fuels excessive speculation and fraudulent behavior.

According to the OSC, an ICO could fall under its jurisdiction even if the tokens themselves don't signify an ownership stake in a particular business.

The agency said:

"Products or other assets that are tracked and traded as part of a distributed ledger may be securities, even if they do not represent shares of a company or ownership of an entity. Businesses' specific use of [distributed ledger technology] may trigger Ontario securities law requirements, including the need to be registered or file a prospectus."

The OSC said that it plans to engage in more dialogue with industry stakeholders in order to prevent businesses from unknowingly violating its statutes.

"Because this is a novel area, businesses may not be aware that some uses of this technology could trigger securities law requirements. We encourage these businesses to speak with us about securities law and investor protection requirements that may apply," said Pat Chaukos, chief of OSC LaunchPad, the agency's fintech-focused outfit.

The warning closely follows an OSC-hosted hackathon at which a number of blockchain-focused startups developed concepts based around the concept of regulatory technology. Notably, one of the top-placing startups developed a solution for categorizing information related to ICOS through which regulators can obtain data.

Image via Shutterstock


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.