The Canadian Securities Administrators (CSA), which comprises securities authorities from Canada’s ten provinces and three regions, have released a lengthy list of new requirements for crypto businesses seeking to remain legally kosher; stablecoin sites are specifically targeted. The Cryptocurrency exchange platforms will enter into a new version of preregistration undertakings (PRUs), which are legally binding documents. Major crypto exchange authorities will be in touch with their registered crypto trading sites to discuss new standards for compliance.
Until the CSA gives its formal approval, exchanges in the nation cannot sell or accept deposits of stablecoins or other “Value Referenced Crypto Assets” (VRCAs). In order to obtain permission, the stablecoin must be verified as fiat-backed, among the many other due diligence requirements set forth by the authorities.
For greater certainty, we would not expect to provide consent in respect of a VRCA that is not fully backed by an appropriate reserve but rather maintains its value through an algorithm.
Wrote the regulator in a notice published on Wednesday
Fiat-backed stablecoins like USDT, USDC, and BUSD keep their asset value stable by maintaining a consistent exchange rate with the underlying currency. According to the CSA, in order to facilitate the purchase and sale of such coins, trading platforms must maintain stocks of “highly accessible assets” (currency and cash substitutes) with a certified administrator. They must be reviewed regularly by external examiners and the results released to the public in a “timely” fashion.
Since “fiat-backed crypto assets usually satisfy the meaning of security,” distributions of these coins must also adhere to Canadian securities law.
Similar to fiat-backed crypto assets, we would generally consider VRCAs pegged to or backed by assets other than fiat currency to be a security and/or derivative, the notice stated. That would include assets backed by other cryptocurrencies, such as Wrapped Bitcoin (WBTC).
The CSA acknowledges that stablecoins serve a number of purposes, including payments and volatility protection, but it also views them as risky than fiat money, including the fiat currencies that are permitted for trading on regulated crypto platforms.
