- The CSA has pushed the deadline for crypto trading platforms to comply with stablecoin regulations to December 31, 2024.
- The CSA warns of the dangers posed by unregulated value-referenced crypto assets (VRCAs).
- Canada lacks a regulated VRCA trading system and specific regulations.
Crypto trading platforms in Canada are facing a new extension to comply with rules surrounding stablecoins, as announced by the Canadian Securities Administrators (CSA).
This marks the second extension for enforcing stablecoin regulations, indicating ongoing adjustments in Canada’s approach to regulating value-referenced crypto assets (VRCAs), particularly stablecoins tied to fiat currencies.
In a press release, the CSA detailed updates for crypto asset trading platforms (CTPs) that are either registered or have provided a pre-registration undertaking (PRU). These updates emphasize the terms and conditions associated with the trading of VRCAs.
The CSA expressed concerns over the harm that unregulated VRCAs have caused investors, citing market disruptions and collapse linked to unregistered participants.
However, Canada lacks a regulated VRCA trading system, and efforts are not being made to develop a VRCA-specific regulatory regime addressing financial condition, conduct, and public disclosure.
Despite these challenges, the CSA has shown flexibility by permitting the continued trading of certain fiat-backed crypto assets (FBCAs), VRCAs tied to a single fiat currency. Under CSA Staff Notice 21-333, a deadline of April 30, 2024, was initially set for CTPs to cease allowing clients to trade FBCAs that fail to meet these conditions.
In response to technical difficulties raised by CTPs, the CSA extended this deadline to October 31, 2024, and opened discussions on a long-term VRCA regulatory framework.
Crypto Investors Warned of VRCA Risks in Canada
The CSA has now further extended the deadline to December 31, 2024, allowing more time for CTPs to either comply or propose alternative solutions that address investor protection concerns. Importantly, the CSA remains open to considering exemptions for specific VRCA use cases, provided they do not raise significant investor risks.
After December 31, 2024, only compliant VRCAs will be permitted for trading by registered CTPs or those that have provided a PRU. The CSA also reaffirmed that, as of December 29, 2023, CTPs must cease allowing clients to engage with non-compliant VRCAs unaffected by the latest extension.
The CSA continues to emphasize the risks associated with crypto assets, warning that VRCAs do not provide the same protections as traditional fiat currency deposits. Investors are urged to exercise caution, as holding VRCAs may result in losses without the guarantees of traditional financial instruments.
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