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Canada Securities Targets Cryptocurrency Exchanges After QuadrigaCX Scandal

Canada’s Securities revealed on January 16, 2019, that it will tighten its hold on cryptocurrency exchanges in the country. Its strict laws will focus on exchanges that offer assets classified as securities or derivatives and/or store the user’s cryptocurrency. This comes in the wake of the QuadrigaCX scandal, which led to the loss of millions of investors funds.

Canada Securities Targets Exchanges

Canadian Securities Administrators (CSA) has issued a “Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets.” It’s believed that the guide seeks to avert scandals like that of the QuadrigaCX. The guide, in question, outlines which cryptocurrency exchanges will be subject to the country’s securities legislation.

Also, exchanges in the country and those outside that offer services to Canadians will be subject to the securities legislation. This will only apply to them if they trade cryptocurrencies classified as securities. In line with that, the legislation will also apply to exchanges that offer derivatives trading.

Exchanges That Store the User’s Assets Are Subject to Canada’s Securities law

Furthermore, the guideline notes that exchanges that store the users’ cryptocurrency are also subject to these laws. This is because these platforms only give users claim to their crypto asset and do not release funds to users immediately.

However, exchanges that neither offer cryptocurrencies that are classified as securities or derivatives, nor store these assets, will not be subject to the legislation.  Also, the delivery time of the asset to users will determine if the securities law applies to the platform.

QuadrigaCX Scandal Heightens Strict Regulatory Control

On the other hand, QuadrigaCX, once the most popular cryptocurrency exchange in Canada, became reputable for another thing. It made headlines when its customers were unable to access the $190 million allegedly held in the exchange’s wallet.

To have more control of the crypto space, the Canadian government mandated cryptocurrency exchanges in August 2019, to report transfers up to CA$10,000 ($7,663). This is to reduce money laundering using cryptocurrencies. 

Canada Looks to Adopt Cryptocurrency Despite QuadrigaCX Scandal

Despite these events, Canada’s central bank looks to launch a national cryptocurrency. It’ll be centralized unlike cryptocurrencies like Bitcoin and overseen by regulators. On the same note, rumours began to circulate that the Royal Bank of Canada (RBC) is developing a cryptocurrency platform. This will enable customers to open cryptocurrency accounts and buy and sell digital assets including Bitcoin and Ethereum.

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