QuadrigaCX Prompts Regulators to Move: Will Canada Clampdown on Crypto?

By March 14, 2019 Bitcoin Business
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The QuadrigaCX debacle that has gripped the crypto space so far this year has evidently not gone unnoticed by Canadian financial regulators. In a consultation paper, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) appealed for the input of various crypto market participants to help with a proposed regulatory framework to address investor protection in the space.

The paper seeks input on areas including custody, asset verification, price determination, and market surveillance. All comments regarding the paper must be submitted by May 15.

CSA and IIROC Seek Input on Crypto Regulatory Framework

Canadian regulators have been spurred into action following the recent QuadrigaCX case in which the CEO of a Canada-based crypto exchange supposedly died with the only access to the company’s funds in cold storage. Various twists and turns in the narrative, including allegations of “fake death mafias” and the missing crypto never being there to begin with, and those QuadrigaCX customers that have lost out due to the fiasco are still no closer to having their money returned.

Presumably in response to this (or at least accelerated by it), IIROC and the CSA published a joint consultation paper earlier today seeking members of the cryptocurrency community to comment on a range of issues that would potentially impact upon how the space is eventually regulated.

The paper goes by the catchy title of: “Joint Canadian Securities Administrators/Investment Industry Regulatory Organization of Canada Consultation Paper 21-402 Proposed Framework for Crypto-Asset Trading Platforms”. It proposes that crypto exchanges be required to be registered as marketplaces, investment dealers, or both. This will depend on the nature of assets traded at the platform, as well as other considerations.

In a summary of the paper, CSA Chair and President and CEO of the Autorité des marchés financier, Louis Morisset, is reported to have said:

The CEO and President of IIROC, Andrew J. Kriegler added:

He went on to state that it was important to adapt to technological innovation such as cryptocurrency and that regulations should be tailored to “unique business models”. Yet, maintaining investor protection was also paramount to the role of regulators.

The paper goes on to state that both the CSA and IIROC are keen to work with international regulators and welcome discourse on a variety of different approaches.

From the wording on the crypto consultation paper, despite the fact that hundreds of millions of dollars are currently in limbo thanks to the mismanagement of QuadrigaCX’s custody solution, it still seems that Canada’s lawmakers are keen to nurture the ever-growing digital industry, rather than clampdown hard on it. The kind of tailor-made regulatory approach that it details is certainly encouraging for the future of the space.

Related Reading: After QuadrigaCX Fiasco, Another Shady Bitcoin Exchange Surfaces in Canada

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Tags: canada, Quadriga, regulations

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