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Canadian regulators have mandated that improved pre-registration be used by cryptocurrency trading platforms in order to register. The modifications forbid the provision of credit, margin, or other types of leverage.
Canada’s government is taking action to regulate cryptocurrencies. The Ontario Securities Commission said in a notice that it has tightened regulation of cryptocurrency trading platforms nationwide.
A description of the “investor protection commitments it expects from crypto asset trading platforms (CTPs) operating in Canada” is included in the notification. It notably makes reference to the numerous bankruptcies that have occurred in the last 12 months. These companies include names like FTX and Voyager Digital, which have also garnered media attention among the general public.
As a result, the Canadian government wants to enact checks and balances to make sure that such occurrences don’t happen again. When the notification was released in February 2022, crypto trading platforms seeking registration will need to submit “improved pre-registration” within 30 days.
Information on the custody and segregation of cryptocurrency assets held on behalf of Canadian customers is part of the expanded pre-registration criteria. Most significantly, it forbids providing Canadians with loans, margins, or any other kind of leverage.
The new regulations also apply to stablecoins. Without explicit authorization, stablecoin purchases or deposits will not be permitted on cryptocurrency trading platforms. This covers proprietary tokens as well.
Governments all across the globe are also putting a spotlight on stablecoins. When Canada launched a consultation on cryptocurrencies and stablecoins in its budget statement last year, it signaled a push into stablecoin rules. Regulations will need to keep up with financial advances, it was noted.
Governments have a lot of trouble with stablecoins because they worry that they may threaten and endanger fiat currencies. As a result, they are reviewing the market to determine its obstacles and potential.
In keeping with its stated aims in the budget statement, Canada has quickened the pace of regulation. As an instance, the decision to outlaw leverage trading was initially made public in December 2022.
Major platforms have altered their products as a result of regulatory adjustments. To comply with the new stablecoin legislation, Crypto.com delisted Tether from its Canadian marketplace. As Canada concentrates on enforcing restrictions in response to events like the collapse of FTX, more such adjustments might soon be made.
