The Canadian Securities Administrators Provides Guidance on Value-Referenced Crypto Assets
The Canadian Securities Administrators (CSA) has issued guidance to cryptocurrency exchanges and issuers regarding its interim approach to value-referenced crypto assets, with a specific focus on stablecoins. The CSA clarified that it may permit the trading of certain cryptocurrencies that reference the value of a single fiat currency, subject to certain terms and conditions.
Earlier this year, the CSA reaffirmed its stance that stablecoins could be considered securities and/or derivatives, which Canadian crypto exchanges are currently prohibited from trading. However, if issuers maintain an appropriate reserve of assets with a qualified custodian and crypto exchanges offering stablecoins disclose relevant information publicly, the CSA may allow for the trading of these assets.
CSA’s Interim Framework
CSA Chair and CEO of the Alberta Securities Commission, Stan Magidson, stated that this interim framework establishes standards to ensure that investors receive necessary information about the assets they are purchasing, including associated risks. However, the CSA cautioned that even compliant fiat-backed crypto assets are still risky and should not be considered risk-free or endorsed by regulators.
Previous Guidance on Staking and Stablecoin Market Capitalization
In July, the CSA released guidance on staking, allowing it but imposing restrictions on lending opportunities and limiting the proportion of “illiquid” assets. Additionally, stablecoin market capitalization has been decreasing over the past 18 months and currently stands at $123 billion, representing around 11% of the total crypto market cap.
Hot Take: CSA Sets Guidelines for Trading Stablecoins Tied to Fiat Currencies
The Canadian Securities Administrators (CSA) has issued guidance for cryptocurrency exchanges and issuers regarding value-referenced crypto assets, specifically stablecoins. The CSA may permit the trading of certain cryptocurrencies tied to a single fiat currency, given that issuers maintain proper asset reserves and exchanges disclose relevant information. This interim framework aims to ensure investors have access to necessary information and understand associated risks. However, the CSA emphasizes that even compliant fiat-backed crypto assets are still risky and should not be considered risk-free or endorsed by regulators. The CSA’s previous guidance on staking allowed it with restrictions, while stablecoin market capitalization has been declining over the past 18 months.
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