• Latest
  • Trending
Sunday, February 9, 2025

No products in the cart.

No products in the cart.

Bitcoin ETFs, strict licensing and a digital dollar

YOU MAY ALSO LIKE

In October, Toronto-based Coinsquare became the first crypto trading business to obtain dealer registration from the Investment and Industry Regulatory Organization of Canada (IIROC). This means that while the exchange is required to report its financial status on a regular basis, Coinsquare investor funds enjoy the security of the Canadian Investment Protection Fund in the event of bankruptcy.

This news is a reminder of the peculiarities of Canadian cryptocurrency regulation. While the country still retains a fairly strict licensing process for crypto-asset providers, experiments in crypto exchange trading funds (ETFs), pension fund investments and central bank digital currency (CBDC) initiatives have seen neighboring US is higher than

Era of limited dealers

Coinsquare, which happens to be Canada’s longest-running cryptocurrency trading platform, is benefiting from its new legal status as its competitors do not currently boast the same legal underpinnings. All other local players must have “restricted dealer” status, indicating that they have made a registered bid and are awaiting IIROC’s decision.

Guidance for cryptocurrency trading platforms was introduced in 2021 by the IIROC and the Canadian Securities Administrators (CSA). Any crypto business that deals in security tokens or crypto contracts must be registered as an Investment Dealer or Regulated Market.

All local businesses are given a two-year temporary period during which they must begin the registration process and possibly obtain a “Restricted Dealer” provisional registration.

The list of restricted dealers given a two-year bailout period during the ongoing registration process is fairly short and includes mostly local businesses such as Coinberry, BitBuy, Netcoins and Virgo CX. These companies still enjoy the right to facilitate the purchase, sale and holding of crypto assets, but they are preceded by stringent compliance procedures required to continue operating beyond 2023. Coinsquare, for example, had to obtain an insurance policy that included a guarantee to cover the loss of crypto assets and funded a trust account maintained with a Canadian bank.

Prosecutors are closely monitoring for violations. In June 2022, the Ontario Securities Commission (OSC) fined Bybit and KuCoin for allegedly operating an unregistered cryptocurrency trading platform in violation of securities laws. KuCoin has been banned from participating in state capital markets and the exchange has been fined over $1.6 million.

land of experiments

At the same time, America has a case of adoption in Canada that sounds radical. For example, with dozens of crypto ETFs invested in the country, Grayscale is leading a legal battle with the U.S. Securities and Exchange Commission (SEC) for the right to launch his first ETF. Have to.

The world’s first Bitcoin (BTC) ETF for retail investors has been approved by the OSC for Purpose Investments in 2021. The purpose Bitcoin ETF accumulates approximately 23,434 BTC. In May 2022, it held around 41,620 BTC.Major Outflows From Aimed Bitcoin ETFs Occurred In June, about 24,510 BTC, or about 51% of assets under management, were withdrawn by investors in one week.

Recently: FTX Collapse Could Change Crypto Industry Governance Standards Forever

Another breakthrough in cryptocurrency adoption in Canada erupted when Canada’s largest pension fund began investing in digital assets. In 2021, Caisse de Depot et Placement du Qubec, one of the largest pension funds in French-speaking Quebec, invested his $150 million in Celsius Network.

In the same month, the Ontario Teachers’ Pension Plan announced a $95 million investment in FTX. Unfortunately, the news didn’t pan out. Both companies subsequently went bankrupt and both pension funds had to write off their investments. Perhaps in that light, the US Department of Labor’s warning to employers against using pension funds involving Bitcoin and other cryptocurrencies now seems like a prudent precaution.

Canada is one of the world’s leading destinations for cryptocurrency mining due to its cold climate, cheap electricity supply, and deregulation. In May 2022, it accounted for her 6.5% of the global BTC hashrate. But this fall, Hydro-Qubec, the company that manages electricity in Quebec, Canada, asked the government to relieve the company of its obligation to supply electricity to cryptocurrency miners in the province. Logically, Quebec’s demand for electricity is expected to grow to such an extent that powering cryptocurrencies puts pressure on energy suppliers.

CBDC development is another direction Canada is moving faster than its southern neighbors. In March 2022, the Bank of Canada, in collaboration with the Massachusetts Institute of Technology, launched his 12-month research project focused on designing Canada’s digital dollar.

In October, the Bank of Canada issued a research report proposing several specific archetypes of CBDCs to help sort out “possible CBDC designs.” In March, “no decision was made on whether to introduce a CBDC in Canada,” but the country’s recent budget revision includes a small section on “commitment to digitizing money.” In a statement, the government said stakeholder consultations on digital currencies, stablecoins and CBDC would begin on November 3, though it was unclear exactly which stakeholders would be involved. remain.

partisan division

Debate over what could become the formal legal framework for cryptocurrencies in Canada Bill C-249 showed sharp partisan divisions on the topic. The bill to promote the growth of the crypto-asset sector introduced It was introduced to the House of Commons in February 2022 by Conservative Party member and former Minister Michelle Garner. Lawmakers have suggested that, three years after the bills passage, Canadas finance minister consults with industry experts to develop a regulatory framework aimed at fostering innovation around crypto.

Despite voiced support from the local cryptocurrency community, the bill received poor approval among fellow legislators. At his second public reading on November 21-23, members of other parties, including the ruling Liberal Party, called both the proposal and the Conservative Party “dark money systems”, Ponzi schemes, bankruptcy of retirees, etc. accused of promotingAs a result, the C-249 is officially buried.

Conservative Party leader Pierre Polivre had most of the heat, while Michelle Garner put forward the bill. advocated for economic freedom. Earlier this year, he urged Canadians to vote for him as a leader to make Canada the blockchain capital of the world.

Canada’s next general election is scheduled for 2025, and until then, given the failure of the C-249 and the general state of the market, Polivre and the Conservative Party have voted in Parliament against their efforts to promote cryptocurrencies. It is unlikely to receive widespread support. The Conservatives currently hold only 16 of 105 seats in the Senate and 119 of 338 seats in the House of Commons.

what’s next

Calgary-based NDAX chief compliance officer and co-founding team member Julia Baranovskaya told Cointelegraph that there are certain challenges the industry is trying to address in terms of trading platforms. .

Most industry players want clear guidelines and a risk-based approach. The majority of Canadian regulators now choose to apply existing financial industry rules and regulations designed and implemented for the traditional financial industry.

However, Baranovskaya stressed that regulators have been engaging in closer dialogue with the cryptocurrency industry in recent years. The Securities Commission created a sandbox to encourage participation in cryptocurrency trading platforms and innovative types of businesses that offer alternative financial instruments. IIROC is also leading a dialogue with industry players to better understand their business models and identify how the current framework can be applied to them.

Recently: Bitcoin miners are turning to software to balance the Texas grid.

However, the challenges of a fragmented regulatory framework and lack of crypto-specific regulation remain. Most existing regulations are based on products, but with the crypto space constantly evolving, product-based approaches are always a few steps behind. In the words of Baranovskaya:

It is imperative to understand the underlying technology behind crypto and De-Fi products that create a flexible and robust regulatory regime that can adapt to the ever-changing crypto space.