Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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CSA Extends Deadline for Crypto Platforms’ VRCA Compliance
Crypto Regulation | Sep 26, 2024
CSA Extends Compliance Deadline for Crypto Platforms Trading VRCAs
The Canadian Securities Administrators (CSA) has published an update for crypto asset trading platforms (CTPs) and those with pre-registration undertakings (PRUs) on complying with requirements for value-referenced crypto assets (VRCAs), such as stablecoins. While Canada doesn't have specific stablecoin regulations, the CSA is enforcing existing securities laws to protect investors. The compliance deadline for platforms has been extended to December 31, 2024, giving CTPs more time to meet the requirements or offer alternatives that address investor protection concerns.
Compliance Deadline Extended
CTPs were originally given until April 30, 2024 to stop trading non-compliant stablecoins. But because of compliance difficulties the platforms were having, the deadline was initially extended to October 31, 2024, and then again to December 31, 2024. This extension gives CTPs additional time to comply with CSA regulations or offer substitute solutions to investor protection issues.
While stablecoins (a form of VRCA) are widely traded in Canada, the CSA emphasizes that there is not currently a specific stablecoin regulatory framework. Instead, the CSA is relying on existing securities regulations to ensure any VRCAs provided by CTPs meets the appropriate requirements of investor protection, financial transparency, and disclosure.
See: Regulatory Updates for Crypto Asset Trading Platforms
By December 31, 2024, all CTPs registered or with PRUs must ensure that any VRCAs issued to customers comply with their registration terms or PRUs. Platforms that were previously obligated to stop enabling customers to buy or hold non-compliant VRCAs (except for specific fiat-backed assets) by December 29, 2023, and the deadline extension does not change that.
Open to Exemptions for Specific Use Cases
The CSA is open to exemptions for particular VRCA use cases that do not raise investor protection concerns. CTP and VRCA issuers are urged to contact regulators about viable alternatives or unusual use cases to discuss.
Conclusion
The CSA's extended deadline allows CTPs more time to comply with VRCA-specific securities requirements.
See: CSA’s 2024 Investor Index. What Fintechs Need to Know
Establishing clear standards for the treatment of VRCAs would promote transparency and security for investors who trade in these assets.
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