The Canadian Securities Administrators (CSA) is urging Canadians to be cautious when considering buying crypto assets through trading platforms.
Specifically, the CSA is warning about platforms calling themselves exchanges, when there are no crypto-asset trading platforms recognized as such or otherwise authorized to operate as a marketplace or dealer in Canada.
“We want investors to understand that just because a platform may advertise itself as an exchange, that does not mean the platform is complying with applicable securities regulations,” said Louis Morisset, CSA chair and president and CEO of the Autorité des marchés financiers, in a release. “If it is not, investors should not expect to receive the same protections that are built into the securities regulatory framework applicable to exchanges or dealers, and should therefore be cautious.”
Crypto-asset trading platforms are online trading facilities that allow investors to buy and sell crypto assets, including bitcoin or ether, or coins or tokens that may have been sold through initial coin offerings or initial token offerings, explains the CSA. In some instances, such platforms are advertising themselves as exchanges.
“If a platform facilitates the trading of crypto assets or interests in crypto assets that are securities or derivatives, that platform is required to comply with securities legislation,” says the release.
Investors should be cautious when dealing with any crypto-asset trading platform because key investor protections may not be in place, it adds. These key investor protections include secure handling of client funds, appropriate safekeeping and protection of assets, confidentiality safeguards for personal information, reliable processes for pricing and trading in crypto assets, appropriate investor pre-trade disclosures, and measures against market manipulation and other harmful practices.