Canada Puts Most Crypto Exchange Under Securities Laws

The Canadian Securities Administrators (CSA) have published new guidance indicating that the majority of the operating in the country will fall under the securities law.
The latest guidelines published on Thursday explicitly specify that any crypto exchange facilitating securities or asset trading will be subject to securities legislation.

The notice also detailed that the securities law can apply to platforms facilitating the buying and selling of crypto assets, which falls under the category of commodity, “because the user’s contractual right to the crypto asset may itself constitute a derivative.”
As the guidelines indicate that most of the centralized crypto exchanges will have to follow , only non-custodial exchanges might be excluded from the list as they do not handle any customer funds.
“The evolving landscape of the industry prompts us to clarify our regulatory framework so as to better support fintech businesses seeking to offer innovative products, services, and applications in Canada,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers.
“As we continue to consider the comments and responses to the consultation we launched last year, the staff notice published today will help platform operators to determine whether their activities are subject to securities legislation.”
The notice raised an alarm in the industry as many digital currencies offer potential voting or dividend rights to their holders, resembling them as securities.
Will the exchanges change the business model?
The agency has advised the exchanges to seek legal counsel and clarified its intentions to take action against any such platforms – based in Canada or abroad – offering services to Canadian clients.
Many countries are now gearing up to regulate the digital asset industry within the existing laws or by introducing new ones. Recently, the Malaysian market regulator to be conducted on registered initial exchange offering (IEO) platforms, with many other limitations.

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