The QuadrigaCX scandal was a landmark case that became a red flag for the entire cryptocurrency community. The aftermath of it, however, isn’t over. Securities regulators in Canada are now preparing to clamp down on cryptocurrency exchanges which take custody of digital assets.
QuadrigaCX Aftermath: CSA Publishes A Notice
The Canadian Securities Administration has issued a staff notice on January 16th which details how cryptocurrency exchanges will be treated. More specifically, the note makes a difference between those exchanges which take custody of their clients’ assets and those which don’t.
Custodial exchanges will receive harsh treatment from the country’s securities watchdog. Per the document, which is also guidance, these exchanges will be subjected to traditional derivatives and security regulations.
In Canada, securities are regulated by different Provinces and not the Federal government. This is why it’s highly likely that the country will be working towards a unified regulation.
On the other hand, the notice also stipulates when those securities laws won’t apply.
“In our view, a mere book entry does not constitute delivery, because of the ongoing reliance and dependence of the user on the Platform in order to eventually receive the crypto asset when requested. The terms of the transaction require that the entire quantity of the crypto asset purchased from the Platform or counterparty seller be immediately transferred to a wallet that is in the sole control of the user, and the transfer is immediately reflected on the Bitcoin blockchain.” – Reads the document.
All of this takes place after the infamous QuadrigaCX cryptocurrency exchange scandal which saw $190 million of users’ funds locked away.
Canada Wakes Up Towards Cryptocurrencies
The above isn’t the first thing that Canada has done towards the field, especially in terms of regulations. Last year, almost immediately after the scandal took place, the country proposed to ban cryptocurrency short selling, as well as margin trading.
In any case, the country appears to be more friendly-oriented towards digital assets. Just recently, reports started circling that the Royal Bank of Canada is looking into launching its very own Bitcoin trading platform. It would supposedly allow the bank’s customers to purchase Bitcoin and to invest in it.