The QuadrigaCX scandal has created a massive dent in the pockets of crypto investors. The infamous scandal has led to the loss of $150 million belonging to cryptocurrency users. Now, Canada has risen to put proper measures in place to regulate cryptocurrency exchanges doing business within its borders, the scandal serving as appropriate motivation.
Investor Protection Is Top Priority
Canada has been hesitant in providing a detailed cryptocurrency regulation. In fact, the country chooses an approach of patience towards cryptocurrency and makes use of its existing regulators and security laws. In this way, Canada keeps an eye on the crypto and fintech businesses within its borders.
Presently, things seem to have changed in the way Canada views cryptocurrency. Ever since a large sum of money vanished following the death of the exchange’s founder, Canada has started seeing cryptocurrency regulation as a necessity. The scandal has led to Canada’s regulators approving the building of “consumer confidence” and “investor protection” according to a press release.
“Canadian Securities Regulators are seeking input on the regulation of #Cryptocurrency #Exchanges, here is a link to the report in case you’re interested in providing a submission.”
Crypto Exchanges Located In Canada Get Behind Regulation
CSA Chair, Louis Morisset, says exchanges are willing to accept fair regulation:
“Platforms have told us that a tailored regulatory framework is welcome as they seek to build consumer confidence and expand their businesses.”
The CEO of IIROC, Andrew J. Kriegler, says in Canada, there is a need to “adapt to innovation.”
“There’s a clear line to draw between #QuadrigaCX and this important proceeding, sure. But, among much else, it also calls out well-known pressure points with banking, insurance & auditing communities. Maybe this also ends up advancing those dialogues?”
Important Issues to Address
There are key areas that need to be addressed following the QuadrigaCX scandal and the first is the “custody and verification of assets.”
The next are issues of “price determination, market surveillance, systems, and business continuity planning, conflicts of interest, crypto-asset insurance, and clearing and settlement.”
The consultation paper reads:
“Global incidents point to crypto assets having heightened risks related to loss and theft as compared to other assets.”
It also made it clear that until this point no “crypto-asset platforms” are acknowledged as exchanges or permitted to function in the capacity of “dealer” in Canada.
Keeping Digital Assets Safe
The lack of adequate protection for investors’ crypto assets occupies the top spot on the list of “risks related to platforms.”
The paper reads:
“Platforms may not have necessary processes and controls in place to segregate participants’ assets from their own and to safeguard those assets, including maintaining and safeguarding any private keys associated with wallets held by the Platform.”
Recent findings on the QuadrigaCX scandal suggests that the exchange’s founder, Gerard Cotton, may have funded the withdrawals made by customers using his money.