Canada Close to Tightening Rules for Crypto Exchanges: Sources
The changes will ensure it’s simply too expensive to do business in Canada, said one person familiar with the plans.
Later this month, Canada’s umbrella markets regulator, the Canadian Securities Administrators (CSA), will tighten requirements for cryptocurrency exchanges operating in the country, according to two people who have been briefed on the plans.
The collapse of FTX, among other failings in the crypto industry, has speeded the resolve of the CSA, which announced midway through last year that it required certain compliance “commitments” from unregistered crypto trading platforms operating in Canada while they pursue registration.
The CSA declined to discuss updates to the pre-registration undertaking (PRU) regime, but said it would “publish additional details in the near future.”
The U.S. Securities and Exchange Commission has already begun accelerating its crackdown on crypto companies, settling charges with exchange Kraken and alleging that a stablecoin issued by Paxos is a security. Other G-7 countries like the U.K. and Canada are likewise increasing their efforts to police the industry in the wake of last year’s disasters.
Some Canadian industry players are worried about the possibility of onerous demands to acquire individual approvals from principal regulators in various territories, for instance. As it stands, some of Canada’s marketplace rules governing alternative trading systems are not passport-able to other jurisdictions.
“This [update to PRU] was primarily driven by the Ontario Securities Commission and will crush the Canadian crypto industry overnight as it completely changes the CSA’s own stated rules and structures and will ensure it’s simply too expensive to do business in Canada,” said one person who asked to remain unnamed due to their ongoing business with regulators.
The CSA’s strengthening of its oversight of crypto trading platforms will impact some of the large global exchanges operating in the country. Binance Canada, for example, has had run-ins with the OSC in the past.
U.S.-regulated crypto exchange Coinbase also operates in Canada under the purview of the Autorité des marchés financiers (AMF), the organization responsible for financial regulation in the Canadian province of Quebec.
A person familiar with the situation said Coinbase has leeway to move over from the AMF to Ontario’s OSC if it made sense for the exchange.
Coinbase declined to comment. The OSC did not immediately respond with a comment.
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