The Canadian Securities Administrators (CSA), the umbrella organisation of Canadian securities authorities, issued new guidelines on 16th January with regard to the regulation of Bitcoin and other cryptocurrencies. The initial aim was to define whether crypto-assets should legally be treated as securities. This is, one might suspect, but it is not always clear.
So the declaration says:
“In some cases, crypto-assets are clearly securities, for example tokenised securities, which carry rights such as voting rights or the possibility of receiving dividends. In other cases, crypto-assets are derivatives, for example when tokens promise the possibility of acquiring an asset in the future.”
Accordingly, securities guidelines should be applied especially to platforms that enable the acquisition of crypto-assets. Platforms that only offer crypto-currencies, which strictly speaking are not securities or derivatives, cannot be excluded from this.
Under these circumstances the Securities Act does not apply to Bitcoin trading
The Canadian regulatory authority nevertheless grants some exceptions. For example, stock exchanges that allow the direct purchase of Bitcoin would not be covered by the Securities Act. In this case, it is particularly important that Bitcoin is transferred directly to the buyers after purchase by the customers. However, the exchange in question must not offer margin trading or trading with leverage.
In addition, only transactions that are registered as such directly on the Bitcoin Blockchain may take place. The platform or the seller may subsequently no longer have any ownership claims to the BTCs sold. In short, only Bitcoin exchanges that allow direct sales are not covered by the Securities Act.
Finally, the regulatory authority encourages prospective exchange operators to get in touch with it in order to try out a regulatory sandbox:
“We welcome innovation and recognise that new FinTech companies may not fit into the existing framework. The CSA Regulatory Sandbox is a CSA initiative to support FinTech companies that want to offer innovative products, services and applications in Canada. It allows companies to register and/or obtain an exemption from securities law requirements in a faster and more flexible process than a standard application to test their products, services and applications across the Canadian market, usually for a limited time.”