Canadian Securities Administrators ready to heighten standards for cryptocurrency exchanges operating in the country, sources


17th February 2023 – (Ottawa) Canada’s overarching markets regulator, the Canadian Securities Administrators (CSA), is set to heighten the standards for cryptocurrency exchanges operating in the country later this month, according to sources who have been informed about the plans. The CSA’s determination has been fueled by a number of cryptocurrency industry failings, including the collapse of FTX. Last year, the CSA declared that it required specific compliance “commitments” from unregistered cryptocurrency trading platforms operating in Canada while they seek registration.

While the CSA has declined to discuss updates to the pre-registration undertaking (PRU) regime, it has stated that it will “publish additional details in the near future.” Other G-7 countries, such as the United Kingdom and Canada, are following the lead of the United States Securities and Exchange Commission in increasing efforts to regulate the cryptocurrency industry in the aftermath of last year’s disasters.

There is concern among some Canadian industry players that they may be required to acquire individual approvals from principal regulators in various territories, which would be excessively burdensome. Currently, some of Canada’s marketplace rules governing alternative trading systems are not transferable to other jurisdictions. One anonymous source expressed their fears regarding the update to PRU, stating that it “will crush the Canadian crypto industry overnight as it completely changes the CSA’s own stated rules and structures and will ensure it’s simply too expensive to do business in Canada.”

The CSA’s strengthened oversight of cryptocurrency trading platforms will have an impact on some of the major global exchanges operating in Canada. Binance Canada, for example, has had disagreements with the Ontario Securities Commission in the past. The United States-regulated cryptocurrency exchange Coinbase also operates in Canada under the purview of the Autorité des marchés financiers (AMF), the organization responsible for financial regulation in the Canadian province of Quebec. However, according to a source familiar with the situation, Coinbase could potentially move from the AMF to Ontario’s OSC if it was deemed beneficial for the exchange.