Authorities in Canada are taking measures to better protect Canadian cryptocurrency investors in the aftermath of the FTX collapse and the spreading contagion.
The Canadian Securities Administrators (CSA), the council of Canada’s provincial and territorial securities regulators, on Dec. 13 issued an update to crypto trading platforms operating in the country.
The CSA said that the authority has been reinforcing its approach to the supervision of crypto trading platforms by expanding existing requirements.
According to the statement, all crypto trading firms operating in Canada — both local and foreign ones — have to comply with newly expanded terms, which ban them from offering margin or leverage trading services to any Canadian clients.
The expanded terms also require crypto exchange services providers in Canada to segregate custody assets from the platform’s proprietary business.
“Custodians will generally be considered qualified if they are regulated by a financial regulator in Canada, the U.S., or a similar jurisdiction with a supervisory regime for conduct and financial regulation,” the CSA noted in the statement.
The council emphasized that even with the adoption of these measures, crypto assets or any financial products related to crypto assets are high-risk investments, urging investors to only invest using a platform that is registered with CSA members.
In the new statement, the CSA mentioned its previous communication to crypto trading platforms operating in Canada, issued on Aug. 15, 2022. The authority stated that it expected commitments from unregistered crypto trading platforms operating in Canada while they pursue registration in the form of pre-registration undertaking.
The CSA communication came shortly after FTX entered into an agreement to purchase the Canadian crypto platform Bitvo in June 2022. FTX originally planned to use the acquisition as part of its global expansion plans. However, Bitvo eventually managed to terminate the acquisition by the now-defunct exchange, which allowed the firm to continue operating even after FTX’s collapse.
Bitvo CEO Pamela Draper told Cointelegraph in November that the acquisition wasn’t completed because the firms were working to satisfy the closing conditions, the most significant of which was regulatory approval from the Alberta Securities Commission.
Despite Bitvo managing to avoid the acquisition by FTX, the impact of FTX’s operations in Canada has not been determined yet, CSA communications manager Ilana Kelemen told Cointelegraph. She stated:
"The impact in Canada, and in other jurisdictions around the world, will not be fully known for some time, including until the investigation in the U.S. 11 Bankruptcy filing is complete."
Kelemen also noted that none of the currently registered crypto asset trading platforms in Canada are offering margin trading.