Mar 22, 2021
In the wake of cryptocurrency industry firsts – including bitcoin prices rising to unprecedented levels and PayPal Holdings Inc. allowing its 377 million users worldwide to buy, sell and hold crypto tokens – the Canadian Securities Administrators (CSA) released a bulletin on March 11, 2020 encouraging companies in the industry to improve the quality of their disclosures to investors. In an article in The Globe and Mail, capital markets reporter Vanmala Subramaniam examines the contents of the nine-page document, such as the guidance that companies that use a third-party “custodian” to hold their crypto assets should provide investors with more information about who the custodians are and where they’re located. In the bulletin, the CSA also urges companies to improve their risk disclosure about possible declines in the price of crypto assets. Subramaniam turns to Lori Stein, a partner in Osler’s Corporate Department, for insight into the bulletin. Lori explains that many of the crypto companies that went public in 2017 and 2018 did so through reverse take-overs and therefore were not obliged to file prospectuses disclosing the details of their operations and risks.
“Crypto companies that are currently public and raising money are going to be held to a higher disclosure standard than what we have seen historically,” she says.
“There seems to be a recognition, even by regulators, that crypto companies are here to stay,” Lori continues. “It makes sense that they are issuing very specific guidance in an area where there’s an uptick in listing activity to make sure investors understand the risks at hand.”
If you have a subscription to The Globe and Mail, you can learn more by reading Vanmala Subramaniam’s full article, “Amid surge in demand, cryptocurrency firms urged to improve disclosures for investors,” published on March 17, 2021.