The Canadian Securities Administrators (CSA) have provided guidance to exchanges and crypto issuers on their interim approach to what it calls reference-value crypto assets, with a particular focus on stablecoins.
On October 5, the umbrella organization for Canada’s provincial and territorial securities regulators published Clarification that trading of certain cryptocurrencies that refer to the value of a single fiat currency may be permitted, subject to the terms and conditions.
In February, the CSA reiterated its view that stablecoins “may constitute securities and/or derivatives” that Canadian cryptocurrency exchanges are prohibited from trading.
However, if issuers maintain an appropriate reserve of assets with a qualified custodian and cryptocurrency exchanges offering stablecoins make “certain information regarding governance, operations and reserve assets publicly available,” the CSA could allow those assets to be traded.
Stan Magidson, CSA president and president and CEO of the Alberta Securities Commission, said in a statement:
“This temporary framework, which we will build on in the future, sets certain standards to help ensure investors get the information they need about the assets they buy, including the risks associated with them.”
The CSA warned that crypto assets backed by fiat currencies that meet the conditions are still risky and should not be considered approved or risk-free.
Related: Cryptocurrency ownership is declining in Canada amid tight regulations, sending prices down
In August, Cointelegraph reported that regulatory clarity in Canada had generated greater interest in cryptocurrencies from institutions.
In July, the CSA issued guidance on mortgages stating that they are permitted but lending opportunities are limited and the proportion of “illiquid” assets is restricted.
The market capitalization of stablecoins has declined over the past 18 months or so, and currently stands at $123 billion, which represents about 11% of the total cryptocurrency market capitalization.
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