The Canadian Securities Administrators (CSA) has issued a comprehensive guidance for fund managers of public investment funds dealing in crypto assets.

• This step is aimed at ensuring compliance with securities law requirements, thereby enhancing the transparency and security of Canada's burgeoning crypto market.  The guidance provides a detailed overview of the operation of public crypto asset funds in Canada, and is a significant step towards regulating the crypto asset market in Canada, providing clarity for fund managers and safeguarding investor interests.
  • The CSA also issued a cautionary note for retail investors, highlighting the speculative nature and high volatility of crypto assets. While regulatory oversight is crucial for investor protection, it cannot eliminate all risks associated with investing in crypto assets.
• Key aspects covered in the notice include:

1. Market characteristics of crypto assets that could influence their viability as investment options for public crypto asset funds.
2. Expectations regarding the custody of crypto assets held on behalf of a fund.
3. Issues related to yield-generating activities, such as staking, by public crypto asset funds.
4. Know-your-client, know-your-product, and suitability obligations concerning public crypto asset funds.

Stan Magidson, CSA Chair and CEO of the Alberta Securities Commission, emphasized the importance of understanding the regulatory obligations for public crypto asset funds, particularly in light of recent events in the crypto market.

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The CSA's Staff Notice 81-336, which provides this guidance, is accessible on the websites of CSA members. The CSA, a council comprising securities regulators from Canada's provinces and territories, plays a pivotal role in coordinating and harmonizing regulation for the Canadian capital markets.

For more information or inquiries, investors are advised to contact their local securities regulator. The CSA's guidance is applicable across all provinces and territories of Canada, including Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan, and Yukon.

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