[NEW]: Canada warns of >200 crypto trading platforms #909

dsghub · 2023-04-03T01:00:16Z

Date

2023-03-31

Description

In March, Canadian Securities Adminstrators (CSA) have published a long list of Investor Alerts, warning Canadians about crypto trading platforms not registered for trading in Canada (and thus not permitted to provide such service to Canadians).

The March warnings are for some 200 crypto trading platforms and come from regulators from coast to coast, from Nova Scotia to British Columbia.

Compare to about 50 such Alerts published on the CSA website in February (although some of the warnings published there in March were issued provincially already in February).

Only ten entities are properly registered in at least one Canadian province or territory for Crypto Trading.

In late March, new stringent crypto-regulations took force in Canada. I have summed them up in German at heise.de. Letting retail clients trade on credit, margin, or leverage is illegal (unless the client has more than 5 million Canadian dollars net assets). Almost anything crypto or NFT is a security, falling under strict securities rules, requiring a permit. Such permits typically restrict retail investors (except millionaires) to betting a maximum of 30,000 Canadian Dollars a year at any one crypto trading platform. (There may be exceptions; Coinbase's permit excludes Bitcoin, Bitcoin Cash, Ether, and Litecoin from the annual betting limit.)

Trading algorithmic "stablecoins" or any stablecoin not entirely covered by liquid assets is illegal. If a stablecoin is covered 100% by liquid assets held by specified third parties, a permit to trade may be applied for. Likewise, Proprietary tokens may only be traded with permission. Trading platforms must separate funds held for customers from their own, must not use them for any other purpose, and must place at least 80% of these funds in trust with specified third parties.

In order to obtain a permit, a crypto trading platform must show that they have qualified Canadian compliance staff, that their Canadian management acts independently from any foreign owners, that they carry insurance and that they have sufficient liquid assets (the value of any crypto assets held is always set at zero). There are restrictions on advertisement, they must not offer any recommendations or advice to clients, have proper KYC, etc.

It likely takes over a year to obtain a permit. However, once the application process has started, a crypto trading platform may continue serving Canadians during the permission proceedings (with conditions). Currently, only a single crypto trading platform is in that status.

[Feel free to reword all this.]