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.

Mar 9, 2017 at 6:52 p.m. UTC
Updated Sep 11, 2021 at 1:08 p.m. UTC

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

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

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

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
Justin Sun Still Thinks Algorithmic Stablecoins Are a Good Idea

The crypto mogul also said LUNA and UST might make good "meme coins," he said on CoinDesk TV’s “First Mover.”

The crypto mogul also said LUNA and UST might make good "meme coins," he said on CoinDesk TV’s “First Mover.”

CoinDesk - Unknown
2
CoinDesk - Unknown
Former BitMEX CEO Arthur Hayes Sentenced to 2 Years Probation

Hayes pleaded guilty to one count of violating the Bank Secrecy Act (BSA) in February, and faced a sentence of up to 12 months in prison.

Hayes pleaded guilty to one count of violating the Bank Secrecy Act (BSA) in February, and faced a sentence of up to 12 months in prison.

CoinDesk - Unknown
3
CoinDesk - Unknown
Market Wrap: Cryptos Decline Amid Choppy Trading, DeFi Tokens Underperform

Aversion to risk remains as volatility returns to stocks and cryptos.

Aversion to risk remains as volatility returns to stocks and cryptos.

CoinDesk - Unknown
4
CoinDesk - Unknown
Travis Kling on Why a Decentralized Web 3 Is Worth Fighting For

Plus more about Ikigai's new Web 3 venture fund.

Plus more about Ikigai's new Web 3 venture fund.

CoinDesk - Unknown