Canadian securities regulators have propose new rules aimed at providing more clarity and risk mitigation measures for public investment funds dealing in crypto assets. The proposed regulatory changes would limit what public investment funds can do regarding cryptocurrencies and set standards for holding crypto assets.
Under the proposed new regulations, only alternative investment funds and non-redeemable investment funds would be allowed to directly trade or hold crypto assets. Other mutual funds wanting exposure to crypto should invest in these funds.
Additionally, the assets to be invested in should be listed on an exchange recognized by a Canadian securities regulatory authority and should be fungible. Assets should also be insured and held in cold wallets, with an annual review of the custodian’s internal management required.
The proposed changes are part of an ongoing project by the Canadian Securities Administrators (CSA) to develop a comprehensive regulatory framework for crypto assets in Canada. The proposals will be open for public comment for 90 days, followed by the development of a consultation document and consideration of a broader regulatory framework for crypto assets. Canada has had limited spot Bitcoin exchange-traded funds (ETFs) since 2021.
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