Lynn Johannson, Advisor, Sustainability and ESG
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Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
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Consultation: OSC Wants to Increase Fees for Crypto Firms
Regulation | Nov 10, 2023
Image: DALL-E3
The Ontario Securities Commission (OSC) has recently put forward a proposal for new fees targeting restricted dealers, including many crypto asset trading platforms.
This development is a clear indication of the increasing efforts to integrate crypto trading platforms into the regulated financial world. These fees are designed to address and recover the higher onboarding costs associated with the registration of restricted dealers, which predominantly include crypto asset trading platforms. The OSC's initiative reflects its ongoing observation of the increased regulatory costs compared to most existing market participants.
Current Fee Structure
- Today, crypto firms are subject to relatively modest registration fees, with amounts hovering around $2,600. This fee is significantly lower than the actual cost incurred by the OSC in registering these firms as dealers with specific terms and conditions.
See: Bitbuy and Localcoin Partner Boosting Crypto Access in Canada
- Firms seeking exemptions to operate as marketplaces pay fees ranging from $4,800 to $7,000, depending on the type of relief sought.
- Current fees also fall short of covering the actual costs associated with these applications.
Proposed Changes
- The proposed fee structure, however, marks a substantial increase. According to the official announcement by the OSC, the proposed amendments, if approved, would introduce two new fees for restricted dealers:
- An additional fee of $24,500 at the time of OSC registration.
- An additional exemptive relief application fee of $24,500 for restricted dealers operating as a marketplace.
- Under the new regime, crypto firms operating marketplace platforms could face up to $49,000 in additional fees.
Impact
The OSC has noted that novel businesses like crypto platforms require more resources to vet. These efforts include initiating compliance discussions, understanding novel business models, and imposing detailed obligations to mitigate investor protection risks. The proposed fees are part of the OSC's broader strategy to foster a fair, efficient, and competitive capital market while ensuring investor protection.
See:
Calgary Police and Chainanalysis Launch the Western Canada Cryptocurrency Investigations Centre
Canada to Require Pension Funds to Report Cryptocurrency Investments
Consultation
The OSC is seeking public comment on these proposals until February 7, 2024, with the new fees expected to take effect on July 2, 2024. This period of consultation offers an opportunity for stakeholders to engage with the regulator and shape the future of crypto regulation in Ontario.
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