Canada’s CSA publishes guidance to crypto asset funds on custody, staking, KYC, and more

Rick Steves

“We encourage stakeholders to review this guidance to better understand our expectations of public crypto asset funds. It is important for such funds to clearly understand their existing regulatory obligations given recent events in the crypto market.”

The Canadian Securities Administrators (CSA), which co-ordinates and harmonizes regulation for the Canadian capital markets, has published guidance to help fund managers understand and comply with securities law requirements for public investment funds holding crypto assets.

The council of the securities regulators of Canada’s provinces and territories is thus making its expectations clear to public crypto asset funds.

“Understand our expectations of public crypto asset funds”

The new CSA guidance, which provides an overview of public crypto asset funds operating in Canada and describes related oversight initiatives by CSA members, also covers.

  • Market characteristics of crypto assets that could impact their viability as investments for public crypto asset funds
  • Expectations concerning custody of crypto assets held on behalf of a fund
  • Issues relating to yield-generating activities, like staking, by public crypto asset funds
  • Know-your-client, know-your product and suitability obligations with respect to public crypto asset funds.

Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission, said: “We encourage stakeholders to review this guidance to better understand our expectations of public crypto asset funds. It is important for such funds to clearly understand their existing regulatory obligations given recent events in the crypto market.”

Investing in crypto assets, even through public investment funds, is higher risk and may not be suitable for most retail investors, the CSA warned, as generally speaking, investing in crypto assets is a speculative activity, and the value and liquidity of crypto assets are highly volatile.

Regulatory oversight of public investment funds is important for investor protection, but it cannot eliminate all risks associated with investing in crypto assets, the CSA noted.

Binance and Bybit leaving Canada amid stricter rules for crypto

In the meantime, the new stricter rules for crypto services providers in Canada is driving some of the biggest names within the space to leave the jurisdiction, namely Binance and Bybit.

Canada’s financial regulator is rolling out a coordinated oversight regime for cryptocurrency activities. Now, all crypto trading platforms seeking registration are obliged to sign undertakings to comply with investor protections. The new rules will also make it more difficult for retail investors to trade cryptocurrencies using leveraged bets.

The Canadian Securities Administrators (CSA) plans to strengthen its oversight of cryptocurrency exchanges operating in the country. As part of a basket of new registration requirements, crypto applicants will have to agree to tighter rules, including a ban on margin and leverage trading.

Additionally, the proposal prevents crypto providers from accepting payments via credit cards and requires them to keep customer assets segregated from their own operational funds.

These measures also include suggestions that providers should be forced to hold all Canadian clients’ assets “with an appropriate custodian and segregate these assets from the platform’s proprietary business.”

To continue operating while their application is being processed, cryptocurrency platforms must give their primary regulator a pre-registration undertaking. By making these commitments, the crypto exchange acknowledges that its platform is bound by terms and conditions that address investor protection issues.

Read this next

Digital Assets

TYRION Advances Decentralized Advertising with Strategic Move to Coinbase’s Base Chain

In a game-changing partnership, decentralized advertising pioneer TYRION integrates with Coinbase’s Base Chain, marking a synergistic leap towards transparent, efficient, and innovative digital advertising solutions in a future driven by blockchain.

Institutional FX

FXSpotStream reports highest ADV in six months

Trading volumes on institutional FX platforms surged in September as traders increased their bets on central bankers’ policy with evidence mounting that inflation and economic growth are not yet losing momentum.

Digital Assets

Coinbase makes major push into Singapore with MPI license

Cryptocurrency exchange Coinbase has secured a Major Payment Institution (MPI) license from the Monetary Authority of Singapore (MAS).

Retail FX

Begin Your Trading Journey by Learning How to Use Trading 212

In the upcoming content, the process of getting started with Trading 212 is explored, from registration and choosing account types to the benefits of connecting with Traders Union.

Institutional FX

Cboe reports +10% increase in monthly FX volumes

Cboe’s institutional spot FX platform today announced its trading volume for the month ending September 2023, which showed resurgence in activity following two consecutive months of reduced trading volumes.


Muinmos integrates TConsult’s Investor Self-Declaration platform into client onboarding platform

“Given the increasing regulatory demands, our clients have eagerly anticipated this integration. Partnering with TConsult, one of the industry’s foremost tax experts, allows us to offer a comprehensive solution. By embedding digital tax certifications into our onboarding processes, we provide a more efficient, risk-mitigated approach to client initiation.”


TS Imagine taps Cassini Systems’ pre-and post-trade margin and collateral analytics

“Joining forces with Cassini allows us to offer a single, integrated system that provides in-depth analytics, streamlining operations for investment and risk management teams. This collaboration stands to significantly benefit our clients in the ever-evolving market landscape.”

Retail FX

XTB launches fractional shares offering in the UK

“The roll-out of Fractional Shares has made capital markets even more accessible for UK investors. Having observed the positive reception to our Fractional Shares in other European regions, we’re confident that this addition fortifies our competitive stance in the UK, positioning XTB as a go-to destination for a diverse range of investors.”


Baton Systems launches DLT-powered post-trade solution Core-Payments ahead of T+1

“With the transition to T+1 now just months away, and with regulators growing increasingly vocal around the need for greater settlement control and supervision, it is paramount that market participants ensure they are fully prepared to cope with any rise in settlement risk