Canadian Crypto Platforms Race To Meet Regulatory Deadline

• Canadian crypto platforms must register as investment dealers and join CIRO to comply with the CSA regulations.
• CSA and CIRO will no longer support interim restricted dealer registrations for crypto platforms.
• CIRO provides guidance and thoroughly reviews crypto platforms’ membership applications.

Crypto trading platforms (CTPs) in Canada are approaching a critical deadline to align with regulatory requirements. The Canadian Securities Administrators (CSA) and the Canadian Investment Regulatory Organization (CIRO) have issued a reminder for CTPs to prioritize their applications for registering as investment dealers and membership with CIRO. This move ensures compliance with Canadian securities laws and promotes a regulated trading environment for crypto assets.

In March 2021, the CSA and the Investment Industry Regulatory Organization of Canada (now CIRO) published Staff Notice 21-329, offering guidance for CTPs on compliance with regulatory requirements. According to the notice, CTPs that facilitate trading in crypto assets that are securities, derivatives, or contracts based on crypto assets must register as investment dealers and join CIRO. The interim approach allowed CTPs to operate as restricted dealers temporarily while they worked towards full registration and membership. However, this period was expected to last only two years, and that time frame has now expired.

Given the elapsed time, the CSA expects CTPs to have a thorough understanding of the requirements and to be actively engaged with CIRO on their applications. Notably, the CSA will no longer support the interim restricted dealer registration for CTPs. Those actively working towards registration should contact their principal regulator to discuss if a time-limited registration remains appropriate.

CIRO is dedicated to an efficient and thorough review process for CTP membership applications. To assist CTPs, CIRO provides guidance on its website, including a Readiness Questionnaire to help firms self-assess their preparedness for membership. CTPs must submit a comprehensive Membership Application Form along with supporting materials. CIRO staff will extensively review the application and, if satisfied, will recommend it to CIRO’s Board of Directors for a decision.

CTPs are encouraged to engage with CIRO staff to streamline the application process. CIRO emphasizes the importance of consulting legal counsel to ensure compliance with Canadian securities laws and CIRO rules.

Investors should be aware of the high risks associated with crypto assets. The CSA urges potential investors to consult the list of authorized CTPs before making any investment decisions. The CSA, as a council of securities regulators from Canada’s provinces and territories, plays a crucial role in coordinating and harmonizing regulations for the Canadian capital markets.