Canadian authorities are looking to build a regulatory framework for crypto

17 Mar, 2019 | Updated: 17 Mar, 2019
by Joeri Cant
Regulation
Canadian authorities are looking to build a regulatory framework for crypto

Two Canadian financial authorities recently joined forces and published a consultation paper to seek input from the country's FinTech community, market participants, and crypto investors in regards to the implementation of regulatory frameworks for Canadian cryptocurrency platforms.

The Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada jointly published a consultation paper where they are looking at the country's FinTech community, market participants, and crypto investors for advice in regards to a regulatory framework for cryptocurrency asset trading.

Read more: Canadian banks raise concerns about possible money laundering at QuadrigaCX

The paper points out that today, there are over 2000 crypto assets, that may be traded for government-issued currencies or other types of crypto assets on over 200 platforms, that facilitate the buying and selling or transferring of crypto assets platforms.

'Many of these platforms operate globally and without any regulatory oversight', the paper reads.

The CSA, is currently in discussion with several cryptocurrency platforms that are seeking guidance on the requirements that apply to them.

'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 financial authorities asks respondents to suggest any global approaches that would be appropriate for the Canadian authorities to consider and implement.

As stated in the consultation paper, currently, Canada does not recognize cryptocurrency platforms as exchanges authorized to operate as marketplaces or dealers within the country.

Read more: Cameron Winklevoss points to Quadriga as example of why crypto needs rules

Recently Chepicap reported that Lisa Kramer, a Professor of Finance at the University of Toronto, said that the QuadrigaCX debacle, above all, shows the urgent need for cryptocurrency regulations.

'That oversight would impose accounting standards and reporting requirements that would help prevent the sorts of irresponsible missteps that put Quadriga depositors in such a precarious position.'

Kramer pointed out that one bad decision about password custodianship can cause more than a 100,000 people to lose access to their deposits.

'The reason why this is even possible', she said, 'lies in the murky and mostly lacking regulations that govern the cryptocurrency world.'

In February, Chetan Phull, the founder of Smartblock Law PC, already stated that he thought that the QuadrigaCX debacle is going to be the case that will kick-start regulatory oversight for crypto exchanges.

'I think Quadriga CX is going to be the case that turns things in Canada and kick-starts regulation because this problem could very well happen again', he said.

The consultation paper by the two Canadian financial authorities do not mention the QuadrigaCX disaster, however, one can assume it was indeed the trigger for this paper.

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