The Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) recently published Joint Canadian Securities Administrators/Investment Industry Regulatory Organization of Canada Consultation Paper 21-402 Proposed Framework for Crypto-Asset Trading Platforms. The consultation paper seeks input from the fintech community, market participants, investors and other stakeholders on how regulatory requirements may be tailored for crypto-asset trading platforms (platforms) operating in Canada.
“This consultation outlines a proposed regulatory framework that provides clarity for platforms, greater market integrity and protection for investors,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Platforms have told us that a tailored regulatory framework is welcome as they seek to build consumer confidence and expand their businesses across Canada and globally.”
Last month, a Toronto based fund manager was denied regulatory approval for its Bitcoin investment fund. 3iQ Corp is asking the OSC for a public hearing to review the decision based on the argument that the new regulations set tougher standards on 3iQ’s valuation, custody, and liquidity. The firm also argued that it is in the public interest to allow retail investors and advisors to gain exposure to Bitcoin through a regulated investment fund, rather than directly purchasing Bitcoin in an unregulated market.
In its application, 3iQ said, ” The fund is not intended to be a complete investment program for any investor, but rather a small allocation within an investment portfolio to provide diversification to an uncorrelated asset class.”
Additionally, 3iQ stated the fund’s initial public offering would be completed by a syndicate of dealers regulated by the IIROC ensuring that, “investors would have the benefit of investment advice from regulated investment professionals when considering the risk profile associated with an investment in Bitcoin, and whether the asset is suitable for their portfolio.”
“This hearing request is an important step for Ontario and indeed for Canada, to show leadership and address global concerns regarding the regulation and custody of cryptoassets,” Fred Pye, president, and CEO of 3iQ said in a statement. “With all the proper pieces in place, we have created an investment vehicle that we believe complies with Canada’s securities laws and seeks to address the needs of all Canadians, including the 5% of Canadians who have invested in bitcoin.”
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