CSA Proposals Aim to Tighten Cryptocurrency Regulations for Canadian Public Investment Funds
Summary:
The Canadian Securities Administrators (CSA) has proposed new regulations for public investment funds dealing with cryptocurrencies, aiming to clarify rules and enhance risk management. If approved, direct crypto transactions will be limited to alternative and non-redeemable investment funds. Additionally, crypto assets would need to be insured, stored in cold wallets, and subject to an annual review by a public accountant. CSA has opened the proposals to public commentary for 90 days, after which a consultative paper will be developed and a broader crypto-asset regulatory framework considered.
The Canadian Securities Administrators (CSA) shared proposed adjustments to regulations concerning the handling of cryptocurrency assets by public investment funds on January 18th. These prospective changes aim to govern the operations of such investment entities in the crypto sector and to regulate standards for custody.
If approved, the changes would limit the ability to directly transact or store cryptocurrency assets to alternative investment funds and non-redeemable investment funds. Other mutual funds would be permitted to invest in these entities for cryptocurrency exposure. Furthermore, the assets that were invested in would need to be listed on a Canadian securities regulatory authority-recognized exchange and have the ability to be mutually replaced.
The public has been invited by CSA to express their thoughts on the proposed regulatory adjustments that will impact public investment funds holding cryptocurrency assets. [Tweet]
Moreover, these assets would require insurance and cold storage options for custody. It would be mandatory for a public accountant to conduct a yearly custodian internal management review.
The executive from Coinbase has stated that these developments could also benefit Canada as the USA finally gets a Bitcoin Exchange Traded Fund.
These amendments will be embedded in the National Instrument 81-102 Investment Funds and its associated Companion Policy. Such national instruments, whether they are regulations or orders, are accepted across all provinces and territories of Canada. Because securities are regulated at the provincial level and coordination being done through the CSA, they are typically codified in national instruments.
According to the CSA, these increased regulatory clarity measures could propel product innovation in the industry while making sure the appropriate risk management practices are directly integrated into the investment fund's regulatory framework.
This amending process started as a project announced previously in July. After opening these proposals for commentary for 90 days, the authorities will draft a consultation paper and contemplate a comprehensive regulatory framework for cryptocurrency assets.
As of 2021, Canada has been hosting Bitcoin exchange-traded funds. For insights on the best and worst countries for crypto taxes along with some tips on the same, refer to this magazine.
Published At
1/18/2024 9:58:30 PM
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