Canada Wants To Govern Crypto Exchanges In Wake Of Quadriga Scandal

Cryptocurrency Canada

Canada wants to redo securities regulations to include cryptocurrency trading operations like Quadriga, which lost the ability to access $195 million of investor holdings after the death of Gerald Cotten, its founder.

Bloomberg reported that Canadian Securities Administrators (CSA) is looking for comment on a proposed framework “to address the novel features and risks” of crypto trading. Those features include the lack of safeguards for investors, inadequate security controls and conflicts of interest, among other things.

Pat Chaukos, deputy director of the Ontario Securities Commission’s LaunchPad, said some crypto traders are subject to regulation but that depends on what assets they trade in, and the way they’re operated.

“This consultation is really directly responsive to what we’ve heard from these platforms,” Chaukos said. “They’ve told us that a regulatory framework is welcome because they’re trying to build consumer confidence and expand their businesses across Canada and in some cases globally.”

The CSA, along with the  Investment Industry Regulatory Organization of Canada (IIROC), released the consultation paper on Thursday (March 14). It said 2018 saw the theft of crypto assets totaling $1 billion from platforms across the globe.

“Global incidents point to crypto assets having heightened risks related to loss and theft as compared to other assets,” the paper said.

Right now, there aren’t any crypto trading platforms that are recognized as an exchange, marketplace or dealer in Canada.

The CSA also outlined a proposals for how regulatory framework should look. That included things like requiring insurance to protect holdings, making registration as an investment dealer necessary and not allowing dark trading or short selling, as examples.

Regulators also want to get input about global approaches to regulation, Chaukos said. The stakeholders who want to give the CSA feedback can do so until May 15.

Quadriga, which was once Canada’s largest cryptocurrency exchange, was granted creditor protection last month.


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