Coinsquare is engaging with Canadian regulators to establish industry standards for online platforms that offer trading in cryptoassets and related financial services. On March 10, 2020, together with four other Canadian-based platforms, we responded to Canadian Securities Administrators (CSA) Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets.
The Staff Notice sets out the position of CSA staff that a platform that does not immediately deliver cryptoassets purchased on the platform to its customers is likely dealing in securities or derivatives. In our view, this interpretation represents a significant departure from CSA Staffs earlier notices on cryptoassets. Coinsquare had expected, based on the CSAs consultation paper published in March 2019, that platforms would be regulated under a new legislative framework that would accommodate the differences between cryptoassets and securities and derivatives, while still protecting investors. Our industry is in a period of rapid change where international competition is fierce, and if Canada wants to be a leader, Canadian platforms need to work closely with regulators.
As Timothy Lane, Deputy Governor of the Bank of Canada, recognized in a recent speech, innovation, competition and consumer choice are good, and disruption is not the enemy. Mr. Lane acknowledged in the same speech that cryptocurrencies require a global effort to understand the wide-ranging implications and ensure the regulatory framework is fit for purpose.
For further information, please read our letter: Canadian Platform Group letter to CSA re Staff Notice 21-327 March 10, 2020. If you are interested in participating in this initiative, please contact our legal counsel.
