Canadian regulators announce marketing guidance for crypto to quash bad practice

Rick Steves

The use of gambling-style promotions, that may encourage excessive and risky trading by retail investors, is also of concern to the agencies.

The Canadian Securities Administrators (CSA) and Investment Industry Regulatory Organization of Canada (IIROC) have published marketing guidance for crypto platforms.

As players within the crypto sphere get increasingly funded to expand further their businesses, the Canadian regulators found it necessary to clarify the rules for advertising, marketing, and social media use under securities law and IIRQC.

The move aims to help crypto trading platforms understand and comply with these requirements as they have noticed a recent increase in advertising and marketing by crypto trading platforms.

According to CSA and IIROC staff, there have been statements in crypto trading platforms’ advertising and marketing materials that could mislead investors.

The use of gambling-style promotions, that may encourage excessive and risky trading by retail investors, is also of concern to the agencies.

Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers, said: “Misleading advertisements and improper marketing strategies may encourage investors to take on risks they would normally avoid, and not respecting the requirements under securities law and IIROC rules may raise concerns about a crypto trading platform’s fitness for registration.”

Andrew J. Kriegler, IIROC President and CEO, said: “Crypto trading platforms should consider their advertising and marketing strategies in the context of their obligations to treat clients fairly and honestly. IIROC will continue to work closely with the CSA to ensure investors are protected.”

Registered crypto trading platforms, platforms that have or will be applying for registration, and other registrants that may be considering establishing a platform as a new business line are the target of the guidance.

The document includes examples of misleading statements in advertising and marketing materials, and outlines the concerns of CSA and IIROC staff over the use of improper gambling-style contests, promotions, and schemes.

It also outlines regulators’ compliance and supervisory expectations for firms using social media. The Canadian regulators advised crypto trading platforms to consult with their legal counsel and contact their local securities regulatory authority on appropriate steps to comply with advertising, marketing and social media use requirements.

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