In a recent announcement, the Canadian Securities Administrators (CSA) extended the deadline for crypto asset trading platforms (CTPs) to comply with regulations governing value-referenced crypto assets (VRCAs).
The new deadline for compliance has been moved from October 31 to December 31 giving CTPs additional time to meet the terms and conditions of their registration or pre-registration undertakings (PRUs).
VRCAs, often referred to as stablecoins, are crypto assets that are tied to the value of fiat currencies like the Canadian dollar. However, the CSA has raised concerns over investor protection, particularly following collapses and market disruptions in unregulated VRCA markets. As part of its ongoing efforts to address these concerns, the CSA had previously issued Staff Notice 21-333, which outlined the conditions under which FBCAs (fiat-backed crypto assets) could continue to be traded by Canadian clients.
Originally, CTPs were required to stop allowing clients to buy, deposit, or enter into contracts for FBCAs that did not comply with regulatory conditions by April 30. This deadline was later extended to October 31 due to technical issues raised by CTPs. Now, the CSA has extended the deadline again to December 31, allowing CTPs more time to comply with the regulations or propose alternative solutions that address investor protection.
The CSA remains open to reviewing proposals from CTPs and VRCA issuers, particularly for specific use cases that do not raise significant investor protection risks. However, after December 31, only those VRCAs that comply with the regulatory terms will be permitted to trade on registered CTPs or CTPs with PRUs.
The CSA also reiterated that crypto assets, including VRCAs, carry significant risks. Holding a VRCA or a crypto contract does not offer the same protections as holding regulated fiat currencies or deposits. Investors are advised to be cautious and informed of the potential losses when trading VRCAs.