Canadian investors at risk as number of unregulated cryptocurrency exchanges explode – The Logic Canadian investors at risk as number of unregulated cryptocurrency exchanges explode – The Logic

With the Canadian Securities Administrators (CSA) issuing a notice regarding jurisdiction over virtual currency dealers, companies in the industry should try to stay on the right side of the guidance rather than face a legal challenge, says Matt Burgoyne, partner and Chair of the Digital Assets and Blockchain practice, in an interview with The Logic.  

“I wouldn’t want to be the platform that is the test case,” says Matt. A legal challenge would be expensive and time-consuming.

The CSA staff notice states that provincial securities regulators have jurisdiction over virtual currency dealers that hold coins in custody for their customers. The notice asserts that, while the most popular cryptocurrencies are not themselves securities, the contracts many trading platforms enter into with customers are.

According to the CSA’s guidance, platforms that do not make “immediate delivery” of cryptocurrencies, but rather hold them until customers want to sell or transfer them to their own digital wallets, are entering into a derivative contract that is subject to securities regulation. While some exchanges immediately deliver cryptocurrencies to an external wallet controlled by the client, most do not.

In Canada, there are more than 600 companies offering cryptocurrency trading services that have not registered with the country’s securities regulators.