Month: March 2020
Canada Issues New Crypto Guidelines
Canadian securities regulators have issued new guidelines for regulating Bitcoin and other cryptocurrencies. It should bring the handling of digital assets into legally secure spheres.
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Canadian Bitcoin Exchange CEO on New Crypto Guidance from Canadian Regulators
The Canadian Securities Administrators (CSA), the umbrella organization of Canadian securities authorities, issued new guidelines for regulating Bitcoin and other cryptocurrencies on January 16. The first step was to define whether crypto assets should be legally treated as securities. This is, one might guess, but not always clearly classified. The statement says:
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In some cases, crypto assets are clearly securities, such as tokenized securities, that have rights such as voting rights or the ability to receive dividends. In other cases, crypto assets are derivatives, for example, if tokens promise the possibility of purchasing an asset in the future.
Accordingly, security guidelines should be applied particularly to platforms that enable the acquisition of crypto assets. Platforms that only offer cryptocurrencies that, strictly speaking, do not represent securities or derivatives, cannot be excluded from this.
Under these circumstances, the Securities Act does not apply to Bitcoin trading
The Canadian regulator nevertheless grants a few exceptions. For example, exchanges that made it possible to buy Bitcoin directly would not fall under the Securities Act. Here it is particularly important that the Bitcoin is transferred directly to the buyer after the purchase by the customer. However, the corresponding exchange must not offer margin trading or trading with leverage.
In addition, only those transactions may take place that are registered as such directly on the Bitcoin Blockchain. The platform or the seller may then no longer have ownership claims to the BTC sold. In short: only Bitcoin exchanges that enable direct sales are not covered by the Securities Act.
Finally, the regulatory authority specifically encourages exchange operators to get in touch with them in order to try out a regulatory sandbox:
We welcome innovations and recognize that new FinTech companies may not fit into the offered platform. The Regulatory Sandbox introduced by the CSA is an effort to assist FinTech companies that want to deliver ground breaking products, services and applications in Canada. It enables companies to register and / or get exemption from the requirements of securities law in a faster and more flexible process than with a standard application to test their products, services and applications across the Canadian market, usually limited in time.