•Canada’s securities regulator is clamping down on crypto firms, banning margin and leverage trading.
• Crypto businesses were told in August that they needed to submit a pre-registration undertaking (PRU) to operate while pursuing full registration.
• A deadline by which PRUs must be received has not yet been announced but will be communicated to platforms “shortly,” a CSA release said.
• The CSA said: “Crypto trading platforms giving these undertakings agree to comply with expanded terms and conditions that will include, among other things, requirements to hold Canadian clients’ assets with an appropriate custodian and segregate these assets from the platform’s proprietary business, as well as a prohibition on offering margin or leverage for any Canadian client.”
The Canadian Securities Administrators (CSA) have recently announced a set of requirements for cryptocurrency platform operators. This crackdown is part of an effort to protect the interests of Canadian investors who are increasingly investing in digital assets. In this blog post, we will discuss the August 2020 regulations imposed by the CSA, as well as the expanded terms and conditions that crypto platforms must abide by in order to operate in Canada.
Submission of Pre-Registration Undertaking (PRU) to Operate
The most important requirement for operating a crypto platform in Canada is submitting a pre-registration undertaking (PRU). This document needs to be filed with the CSA before any platform can begin offering services or products related to digital assets. A PRU outlines how the business intends to comply with applicable securities laws and regulations, including any additional disclosure documents that may need to be provided. As part of their undertaking, crypto platform operators must also agree to follow all terms and conditions imposed by the CSA.
Deadline for Submitting PRUs
Crypto platform operators have until August 24th, 2020 to submit their PRUs in order for them to become effective starting October 1st, 2020. Failure to submit a valid PRU by this date could result in serious penalties or even criminal prosecution against those responsible for managing and operating these businesses. Therefore, it is important that all stakeholders involved take this deadline seriously and ensure they have properly complied with all applicable regulations prior to submitting their PRUs.
Expanded Terms and Conditions Imposed by CSA
In addition to requiring PRUs from crypto platform operators, the CSA has also expanded its terms and conditions on how these businesses should operate going forward. These expanded terms include holding Canadian clients’ assets with an appropriate custodian; segregating client funds from proprietary business funds; and prohibiting offering margin or leverage trading for any Canadian client. All of these measures are aimed at helping protect investors from potential risks associated with investing in digital assets through unregulated platforms.
The recent crackdown on crypto platforms by the Canadian Securities Administrators is part of an effort to promote transparency and investor protection within the industry. By requiring crypto platform operators to submit pre-registration undertakings as well as imposing new terms and conditions on their operations, the CSA hopes to create a safer environment for Canadians who wish to invest in digital currencies like Bitcoin or Ethereum. While these new regulations may create some short-term disruption within the industry, they should ultimately help create a more secure ecosystem where investors can make informed decisions about their investments without fear of losing their money due to fraud or mismanagement. It remains to be seen how successful these new measures will be at achieving this goal but regardless, they are indicative of regulators’ increasing focus on protecting investors’ interests regarding digital asset investments.
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