In a recent report, it has been said that the Canadian regulatory body is likely to place rules for the cryptocurrency exchanges in the country. In a strong move to make it a success, the Canadian Security Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) published a consultation paper on Thursday, seeking advice from the fintech community on how regulatory requirements can be developed for cryptocurrency platforms.
The President and CEO of the IIROC, Andrew J. Kriegler, further emphasized that cryptocurrency is a growing area of interest. It must, however, be mentioned that the regulatory framework will be applied in relevant areas. One fine example is if cryptocurrencies are securities or derivatives that have been traded on an exchange, the latter would be subjected to securities or derivatives regulatory frameworks. Regulators further added that most “utility tokens” have involved the distribution of securities, usually as investment contracts.
It must be mentioned that cryptocurrency platforms are hybrid in nature, which means they can perform multiple functions for varied market participation. This may also include alternative systems, exchanges, dealers, custodians and clearing agencies.
This has encouraged the agencies to prepare for tailor-made regulatory requirements to consider the risks involved with cryptocurrency. According to reports, none of the cryptocurrency exchanges in Canada are recognized as an exchange nor are authorized to operate as a marketplace or dealer.
The state of the cryptocurrency industry in Canada is further highlighted by the issues faced by the QuadrigaCX saga. In an unfortunate incident, the company’s CEO Gerald Cotton died, without giving access to staff into the failing exchange’s funds. It is believed that QuadrigaCX still owes its customers roughly $180 million in both Cryptocurrency and Fiat. The security exchanges staff also said that they did not have any regulation to remit the troubled exchange.
The Quadriga story
Quadriga grew to fame when one of the world’s biggest online cryptocurrency exchanges-MtGox-unexpectedly shut down after losing 850,000 Bitcoins. While this shook investors in the market, it also gave a ray of hope to the emerging bitcoin company Quadriga, which banked upon people’s trust in their location. Quadriga founder Gerald Cotton had said,
“People like the fact we’re located in Canada and know where their money is going.”
History repeated when Cotton died suddenly some five years later, leaving its investors clueless where their money was. In this context, Quadriga was granted temporary bankruptcy protection in a Canadian court in February. The firm said that it was trying to reach its reserves, but knowing avail since they had no access to the funds that Cotton had kept to himself.