A confirmation came from the Canadian Securities Administrators (CSA), the country’s top financial watchdog, that the common exchange practice of custodying users’ assets could subject them to securities legislation. According to a joint statement, whether a crypto asset has been immediately delivered to platform’s user is a significant component in evaluating whether, and the extent to which, the transaction and the platform are subject to securities legislation. Transactions without immediate delivery form derivatives sales. And in case the custodied asset is recognized as a commodity, it could be categorized as the sale or debt or of an investment contract.
But it is yet to know that what time frame the group has for a transaction to qualify under exemption because exchanges that simplify ‘’immediate delivery’’ will be exempt. Some exchanges, those who can’t comply, can be pushed out of Canada by the new regulatory requirements. So, it can be said only a little number of brokers will stay in the field who are able to comply with the regulatory framework. The guidance is coherent with a consultation paper which was published in March, 2019 by the CSA and the Investment Industry Regulatory Organization of Canada. It is expected that regulators will count down a number of custodial trading platforms subject to securities legislation even though different platforms have their own specifics.
There was an allegiance back in November against the Einstein exchange from users that they were unable to access their funds. So, the users started forcing the British Columbia Securities Commission to seize the exchange. The incident of Quadriga exchange, which was failure to recover up to $190 million worth of funds after the death of founder Gerald Cotton, is also a memorable issue. CSA might be focusing on customer protection with the attempt to capturing every platform. They want that every consumer transacting in the crypto space has their own wallet.