Canada Takes Steps to Protect Crypto Investors from Risky Investments

In a recent move to better protect Canadian cryptocurrency investors, the Canadian Securities Administrators (CSA) has updated its requirements for cryptocurrency trading platforms operating in Canada. These new requirements apply to both local and foreign crypto trading firms, and include a ban on margin and leverage trading services, as well as a requirement for the segregation of custody assets from the platform's proprietary business.

The CSA has emphasized that even with the adoption of these measures, cryptocurrency assets remain high-risk investments. In a statement, the CSA said, "Cryptocurrency assets are not subject to the same regulatory protections as other securities and investment products. Investors should be aware of the risks and be prepared for the possibility of significant losses."

The CSA had previously issued a communication to cryptocurrency trading platforms operating in Canada on August 15, 2022. In that communication, the CSA expected unregistered crypto trading platforms to make commitments to pursue registration in the form of pre-registration undertakings.

The new requirements come after cryptocurrency exchange FTX attempted to enter the Canadian market in June 2022. FTX had entered into an agreement to purchase the Canadian crypto platform Bitvo, but the acquisition was eventually terminated. This development, along with other factors, has likely contributed to the CSA's decision to update its requirements for crypto trading platforms operating in Canada.

The CSA has said that qualified custodians will be those regulated by a financial regulator in Canada, the U.S., or a similar jurisdiction. Investors are urged to only invest in crypto assets using a platform that is registered with CSA members.

While the CSA's updated requirements for crypto trading platforms operating in Canada are intended to better protect investors, it is important to note that the agency has not provided any guarantees or assurances about the safety of investing in cryptocurrency. As such, it remains crucial for investors to thoroughly research and carefully consider the risks associated with investing in cryptocurrency before making any decisions.