Canada Demands Crypto Exchanges Mandatory Pre-Registration Within 30 Days

Key Points:

• The Canadian government has implemented a new requirement for all cryptocurrency exchanges operating in the country to pre-register.
• The pre-registration process is aimed at improving the overall regulatory oversight of the crypto industry in Canada and will require exchanges to provide information such as their business activities, ownership structure, and compliance policies.
• Failure to comply with the pre-registration requirement could result in penalties and fines and may also impact an exchange’s ability to obtain banking services or to continue operating in the country.

Crypto exchanges in Canada that intend to operate nationally must go through a pre-registration procedure within 30 days, according to a notification published on February 22 by the Canadian Securities Administration (CSA).

Custody restrictions, which include isolating crypto assets stored for local customers, barring margin and leveraged trading, and banning the selling of stablecoins without the CSA’s approval, will have to be followed by crypto asset trading platforms as part of the pre-registration procedure.

As the CSA claimed that stablecoins would be considered securities and/or derivatives and demanded that exchanges get licenses for their selling, Canadian officials started to crack down on stablecoins.

The pre-registration undertaking will also need extra promises from crypto asset trading platforms to retain a Canadian client’s assets, including cash, securities, and crypto assets that are not securities.

According to the CSA, trading platforms must only permit the purchase or sale of such tokens if their reserves are made up of highly liquid assets and are kept with a licensed custodian. Moreover, they must be the focus of a monthly audit by impartial auditors, which must be timeously made public.

The CSA expects crypto asset trading platforms to take necessary steps to off-board current Canadian customers and implement limits to prevent Canadian users from accessing their products or services if they are unable or unable to offer an upgraded pre-registration commitment.

Stan Magidson, the CSA’s chair, provided the following justification for this action:

“Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada.”

The CSA also advised citizens of Canada that trading in cryptocurrencies entailed an elevated degree of risk and might not be suited for all investors.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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