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OSC Green Lights Kraken’s Restricted Dealer Status
Crypto | April 4, 2025
Image courtesy of Kraken's blog post
OSC Approves Restricted Dealer License for Kraken to Operate Nationally in Canada
On April 2 2025, Kraken (Payward Canada Inc.) announced that it officially received approval as a Restricted Dealer, under the new registration framework for crypto platforms. The Ontario Securities Commission (OSC) issued Payward Canada Inc's approval order (63 page PDF) and has updated their live registry of 'Registered Crypto Asset Trading Platforms', which applies nationally under the passport system that allows provinces and territories to recognize each other's decisions, so Kraken is open for business from coast to coast, from B.C. to Newfoundland to Nunavut.
Kraken also announced that based in Toronto, Cynthia Del Pozo, is its new General Manager for North America and will focus on strengthening the firms regulatory, political and commercial partnerships and scale Kraken's growth and brand across North America. To celebrate the registration milestone, Kraken is offering free Interact e-Transfer deposits for Canadians, making it easier and cheaper for users to onboard funds onto the platform.
See: Kraken Acquires Retail Futures NinjaTrader $1.5B
In Kraken's blog post, it acknowledges that Canada has played a pioneering role in crypto adoption by being the first country to install a public Bitcoin ATM (downtown Vancouver) and also the first to launch a regulated spot Bitcoin and Ethereum ETFs in 2021.
Kraken Canada's Achievements
Over the past two years, Kraken has been scaling up its activity and presence in Canada:
- Doubling its Canadian workforce and number of active users
- Surpassing $2 billion CAD in client assets under custody(announced November 2024)
- Launching Canadian dollar trading pairs to help clients avoid foreign exchange fees
- Laying groundwork to serve institutional investors seeking regulated crypto access
Limitations with Kraken's Restricted Dealer License
While obtaining a Restricted Dealer registration status is a clear win, there are some key limitations and safeguards that Kraken Canada must follow, providing a clearer picture of how the OSC and other provincial regulators are tightening crypto rules.
1. Kraken Canada's users' assets aren't insured by the Canadian Investor Protection Fund (CIPF). That means if something goes wrong with the platform, there’s no insurance on your assets. Every user has to agree to this before they can trade.
2. Kraken’s Flexible Staking program that allows users to earn rewards while keeping control of their crypto must shut down within 120 days of April 1 unless regulators grant approval or an extension. New users are already blocked from joining it.
3. Kraken isn’t allowed to help create or promote new cryptocurrencies unless it gets the green light from regulators. This rule helps prevent conflicts of interest between Kraken and the projects/tkens listed on its platform.
See: SEC Drops Yuga Labs Investigation and Kraken Case
4. If a token is labelled a security or derivative by a regulator (in Canada or elsewhere), or if the people behind it have a track record of fraud, money laundering, or other serious violations, Kraken has to stop offering it right away.
5. Canadians can only access Kraken through its local Canadian platform (overseen by Canadian regulators), and not Kraken's global site.
6. Kraken isn’t allowed to include its own crypto holdings (unless those assets are connected to client accounts) when reporting its financial position. This keeps the company from padding its numbers with risky or volatile assets.
7. Kraken isn’t allowed to trade crypto for its own profit (can't be a market maker). It can only trade/fill client orders or manage risk. That means no speculative bets or operating a money making trading desk behind the scenes.
How Kraken’s Current Status Compares to the Next Regulatory Tier
Kraken also plans to apply for full investment dealer registration and join the Canadian Investment Regulatory Organization (CIRO), which would allow it to offer more services including an Alternative Trading System (ATS) for crypto trades.
See: Kraken’s Strategy for Canadian Market Growth
| Feature | Restricted Dealer (Kraken now) | Investment Dealer + ATS (Kraken future) |
| Regulatory Status | Temporary or limited-purpose license | Full dealer registration under securities law |
| Regulator | OSC + CSA with PRUs | CIRO (formerly IIROC) + OSC/CSA |
| Membership | Not a member of CIRO | Full CIRO member |
| Investor Protection | No CIPF coverage | Yes — CIPF protection for client funds |
| Eligible Clients | Retail and institutional | Retail, institutional, advisory, discretionary |
| Crypto Products | Crypto Contracts only (not securities) | Potentially securities, derivatives, asset-backed tokens |
| Trading Venue | Not a formal exchange or ATS | Can operate an ATS |
| Staking Products | Allowed with restrictions | Subject to broader oversight, possibly wider offering with CIRO approval |
| Market Making | Not permitted | May be permitted under ATS/marketplace rules |
| Capital Requirements | Lower — tailored to risk | Much higher; must meet CIRO's ongoing capital tests |
| Surveillance & Audit | Periodic OSC reporting | CIRO-mandated audits, books & records, daily capital reports |
| Risk Assessment | Suitability per trade (retail) | Full KYC, suitability, supervisory systems, conflict management |
Outlook
Kraken’s approval shows that crypto in Canada is moving into a more regulated phase with greater protection, clearer rules, and more accountability/responsibility. Kraken’s next step is to become a full investment dealer, which could lead to new services and even stronger safeguards for users.
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