Matthew T. Burgoyne
Oct 13, 2022
Last week, Coinsquare became the first Canadian crypto trading platform to register as an investment dealer with the Investment Industry Regulatory Organization of Canada (IIROC). The platform will now have to comply with several new requirements, including fully segregating client assets through a licensed and insured custodian, keeping more capital on hand and regularly reporting on its balance sheet. Cash held in clients’ trading accounts will now also be insured against insolvency by the Canadian Investment Protection Fund.
Osler partner Matthew Burgoyne, Co-Chair of the firm’s Digital Assets and Blockchain practice group, spoke to Yahoo! Finance about the landmark announcement.
“I personally think that it's a very big deal,” he says.
“[IIROC] is historically a very conservative organization that licenses investment broker dealers. So, the more traditional financial sector. IIROC welcoming and accepting for registration a cryptocurrency exchange with retail users is a very significant development in the securities world and in the cryptocurrency world.”
Last year, Canadian securities regulators determined that crypto exchanges fell under their jurisdiction, requiring them to register as restricted dealers and giving them two years to register as investment dealers with IIROC. Other crypto platforms are working toward the same registration.
Matthew says that the IIROC registration puts Coinsquare one step closer to competing in the international market.
“The competitors to the Canadian crypto exchanges are large international crypto exchanges located offshore that offer all these different services and products like margin, futures trading, leverage.”
“Right now, all the regulated Canadian exchanges can't extend margin, credit or other forms of leverage so they're losing a competitive advantage to the large offshore international exchanges. Hopefully the Canadian IIROC-registered exchanges like Coinsquare will soon be able to offer margin and leverage which would even the playing field a bit,” he says.
If Coinsquare plans to offer leverage, however, Matthew says there will probably have to be more “risk disclosure and education that's conveyed by the platform to the user.”
You can read Michelle Zadikian’s full article, “‘It's a very big deal': Coinsquare gets IIROC approval in crypto world first,” on the Yahoo! Finance website.