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Today in a release, CSA reminds dealers and investors of the inherent risks associated with products linked to cryptocurrencies—including futures contracts.

Read: Bubble speculation as bitcoin’s rise continues

“While these contracts may be traded on regulated exchanges and may be cleared by regulated central counterparties, the fact remains that their high level of risk will not be suitable for all types of investors,” says CSA.

Read: Amid bitcoin buzz, BoC considers its own digital currency

In the release, Louis Morisset, CSA chair, says: “More specifically, the underlying value of these futures contracts is based on trading occurring on markets for cryptocurrencies which are largely unregulated. Therefore, there may be some circumstances such as price volatility in the underlying markets, which may lead to consequences such as sudden and significant margin calls in the futures market.”

Registered dealers and advisers must perform their own due diligence on cryptocurrency-linked products before recommending them to their clients, says CSA.

Read: Canada to get its first cryptocurrency ETF

For additional information on the risks of cryptocurrencies, read CSA staff notice 46-307 Cryptocurrency offerings.

Originally published on Advisor.ca
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