CTPs Face Enhanced Pre-Registration
Crypto asset trading platforms (CTPs) operating in Canada now face an enhanced pre-registration undertaking to continue operating in Canada while pursuing their applications for registration with Canadian securities regulators. "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," says Stan Magidson, Canadian Securities Administrators (CSA) chair and chair and CEO of the Alberta Securities Commission. Unregistered CTPs that continue to operate in Canada while pursuing registration are expected to provide an enhanced pre-registration undertaking to their principal regulator within 30 days of publication of this notice. These pre-registration undertakings will include, among other things, enhanced expectations regarding the custody and segregation of crypto assets held on behalf of Canadian clients and a prohibition on offering margin, credit, or other forms of leverage to any Canadian client. They will also prohibit CTPs from permitting clients to purchase or deposit value-referenced crypto assets (commonly referred to as stablecoins) and proprietary tokens without the prior written consent of the CSA.