With a focus on stablecoins, the Canadian Securities Administrators (CSA) has provided guidance to exchanges and cryptocurrency issuers on its temporary approach to value-referenced digital assets. The group, which stands in for Canada’s provincial and territorial securities authorities, clarified on October 5 that, subject to certain criteria, it may allow trading of particular cryptocurrencies that correspond to the value of a single fiat currency.
Stablecoins may be regarded as securities or derivatives, and Canadian cryptocurrency exchanges are not permitted to trade them, the CSA reiterated in February. However, if issuers keep a sufficient reserve of assets with a certified custodian and stablecoin exchanges make certain information about governance, operations, and reserve of assets public, the CSA may permit those assets to be traded on the exchange.
Stan Magidson, the president and chief executive officer of the Alberta Securities Commission and chair of the CSA, said that the interim framework establishes a number of principles to help ensure that investors are given the information they require about the assets they are buying, including the risks involved. The CSA further cautioned that even crypto assets backed by fiat that abide by the rules are nonetheless dangerous and shouldn’t be taken as endorsed or risk-free. According to some sources, institutions in Canada are becoming more interested in cryptocurrencies as a result of regulatory certainty. The CSA released guidance on staking in July, indicating that it was permitted but that lending possibilities were scarce and that the percentage of illiquid assets was constrained. Over the last 18 months, the market capitalization of stablecoins has decreased and is now $123 billion.