One of the mostly enthusiastically discussed topics in the world of crypto is the need for having well-defined regulatory frameworks surrounding the industry. A few countries have already taken the initiative to develop such structures and now Canada seems to be ready to join them as well. A recent consultation paper published by two of Canada’s most major financial authorities: The Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada, indicate their growing interest in regulation.
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The said consultation paper is meant to open lines of communication with the fintech community that is active within the country. Through this paper, the authorities are seeking inputs from crypto investors and others who actively participate in the crypto market.
At the very outset, the paper lays down its objectives in the following terms quite clearly:
“We endeavor to facilitate innovation that benefits investors and our capital markets, while ensuring that we have the appropriate tools and understanding to keep pace with evolving markets.The purpose of this joint CSA/IIROC Consultation Paper (the Consultation Paper) is to seek feedback from the financial technology (fintech) community, market participants, investors and other stakeholders on how requirements may be tailored for Platforms operating in Canada whose operations engage securities law. We intend to use this feedback to establish a framework that provides regulatory clarity to Platforms, addresses risks to investors and creates greater market integrity.”
The paper harped on the urgent need for regulation to standardize transactions within a massive industry that sees trading on over 2000 assets on a regular basis. All these virtual assets are bought and sold against government-issued fiat currency and as the paper argues, lend themselves to a need for regulation.
The paper hits the nail on its head as they talk about an oft-discussed problem within the crypto industry:
“Many of these platforms operate globally and without any regulatory oversight.”
The CSA has reportedly been approached by many crypto platforms looking for some clarity and guidance about which rules they must play by. Judging from their attitude, the authorities believe that the market itself is eager to have a regulatory structure imposed upon it.
‘We have heard directly from these platform operators and their advisers, that a regulatory framework is welcomed, as they seek to build consumer confidence and expand their businesses across Canada and globally.’
The government currently does not have any legal recognition for crypto platforms as exchanges licenced to serve as trading marketplaces or dealers within Canada. However, industry insiders are hopeful that things are moving towards a positive change.