Canadian Self-Regulatory Agency Approves First Crypto-Native Investment Dealer

Coinsquare has also been granted a license to operate as a regulated alternative trading system, allowing it to match large, illiquid crypto trades between institutional investors.

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Toronto-based crypto exchange Coinsquare became a member of Canada’s top self-regulatory organization (SRO) – the Investment Industry Regulatory Organization of Canada (IIROC) – on Thursday, making it the first crypto-native platform to join that body.

In addition to granting Coinsquare membership, IIROC also greenlit the exchange’s investment dealer registration and gave approval to operate as a regulated alternative trading system (ATS) in the future.

Though Coinsquare is the first exchange to join IIROC, it is unlikely to be the last. In March 2021, the Canadian Securities Administrators issued a public notice informing crypto exchanges they needed to register with a securities regulator if they wanted to keep serving Canadian customers, triggering a rush to comply with regulatory requirements.

Coinsquare, however, began the long process of becoming an IIROC member before it was compelled to do so. Katriana Prokopy, Coinsquare’s chief legal officer and head of regulatory affairs, told CoinDesk the exchange began pursuing regulatory approval two years ago.

As a member of IIROC, Coinsquare will undergo rigorous audits and oversight to ensure it remains in compliance with regulatory requirements – something Prokopy said could be a comfort to investors, especially in the wake of high-profile collapses of crypto exchanges, including Celsius Network.

“Becoming an IIROC dealer and member of IIROC, it gives clients the security that they’re dealing with an intermediary, a securities dealer, with all the sorts of protections and oversight that they’re familiar with when they trade traditional assets,” Prokopy said. “And, heretofore, that has not been the case.”

There is, however, one important bit of coverage Coinsquare’s clients won’t get through its IIROC membership – protection of their crypto assets from the exchange’s potential insolvency.

Members of IIROC automatically become members of the Canadian Investor Protection Fund, which offers limited protection for property held by a member fund on behalf of investors if the member becomes insolvent. However, in Coinsquare’s case, CIPF will only apply to fiat held in customer’s accounts in case Coinsquare goes in the way of Celsius.

Prokopy said she hopes CIPF’s coverage will eventually change to include crypto.

“Like the regulatory framework generally, CIPF coverage is evolving. In time, we hope to push the envelope on that and be part of the conversation in which [CIPF] evolves to cover crypto assets as well,” Prokopy said. “But that is not the case today from a CIPF perspective.”

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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.

Cheyenne Ligon

Cheyenne Ligon was a CoinDesk news reporter with a focus on crypto regulation and policy. She has no significant crypto holdings.


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