Crypto Asset Statement - Bitcoin Cash

About this Statement

Coinsquare Capital Markets Inc. (“Coinsquare”) is offering crypto contracts to purchase and sell Bitcoin Cash in reliance on a prospectus exemption granted by the Canadian Securities Administrators (CSA) in the exemptive relief decision dated July 5, 2022. The statutory rights of action for damages and the right of rescission in section 130.1 of the Securities Act (Ontario) and similar legislation in the other CSA jurisdictions do not apply in respect of a misrepresentation in this statement to the extent that a crypto contract is distributed under the above-noted prospectus relief.

No securities regulatory authority in Canada or any other jurisdiction has expressed an opinion about any of the crypto assets (or crypto contracts) that are available through Coinsquare’s platform, including an opinion that the crypto assets are not themselves securities and/or derivatives.

Coinsquare has compiled the information contained in this Crypto Asset Statement to the best of its ability based on publicly available information.  Coinsquare is providing this Crypto Asset Statement on an “as is” basis and makes no representation or warranty as to accuracy or completeness of the contents.   

About Bitcoin Cash

Bitcoin cash is a cryptocurrency created in August 2017, from a fork of Bitcoin. It was created to accommodate a larger block size compared to Bitcoin, allowing more transactions into a single block. However, one fundamental difference between the Bitcoin to Bitcoin Cash fork and other cryptocurrency forks is that Bitcoin Cash carried out the fork to move away from Bitcoin and not enhance the original cryptocurrency.

Risks

As with all assets, investing in Bitcoin Cash is not without some general risks. Many of these risks are identified and explained in our Risk Statement. In addition to the general risks, we outline some risks that are specific to Bitcoin Cash below. While we make an effort to identify every source of risk, we encourage you to do your own research and ensure you are comfortable investing in Bitcoin Cash.

BCH halving

Since Bitcoin Cash is the result of a fork on the Bitcoin network, its halving protocol is similar to that of Bitcoin’s whereby the reward for block validation is reduced by 50% every 210,000 blocks. As the rewards for mining have reduced, the BCH network has seen some miners leave the network. If this trend continues with future halvings, the pool of miners will reduce and leave the network with increased susceptibility to a byzantine attack or other security threats.1

Coinsquare’s Due Diligence for Digital Assets

To be made available for trading on Coinsquare’s platform, a digital asset must pass the following due diligence reviews:

  1. Coinsquare Securities Law Assessment
  2. Coinsquare Digital Asset Security Audit
  3. New Digital Asset Business Case

Coinsquare undertakes these three levels of due diligence in order to determine whether the digital asset is compliant with our legal and regulatory obligations, is secure, and has historical data supporting a beneficial business case. Coinsquare’s New Product Committee must provide final approval for a new digital asset to be made available on the platform.

References:

  1. Osato Avan-Nomayo. “Bitcoin Cash Halving Results in Miner Exodus and Profitability Decline.” April 9, 2020.  https://cointelegraph.com/news/bitcoin-cash-halving-results-in-miner-exodus-and-profitability-decline

Published Date: July 5, 2022