List of Canadian-authorized cryptocurrency trading platforms continues to grow

Despite their staying power over the years and recent growth, cryptocurrency markets continue to be volatile. The valleys and hills in those markets have made some investors wary and kept regulators on their toes. That said, there are stalwart parties who are encouraging the cryptocurrency space to mature. It’s no surprise why: the estimated market capitalization of all cryptocurrencies at the time of writing is more than 1.5 trillion dollars.

Regulators have turned their minds to encouraging innovation in the space and are also guided by a mandate to protect consumers. This means that places where consumers can get cryptocurrency — cryptocurrency platforms — are squarely in the sights of Canada’s securities commissions. Over the years, more regulations have come into place and legislation has been amended to ensure that the fraught elements of cryptocurrency trading are reined in.

As part of this oversight, the various securities commissions have provided special, time-limited methods for cryptocurrency platforms to chart toward compliance with the applicable securities legislation in each operating province. The end goal is of course total compliance that allows these platforms to contribute to the economy and protects consumers.

This is exemplified in the recent decisions of the various securities commissions, including the Manitoba Securities Commission, that allow these platforms to become restricted dealers. A restricted dealer is simply a dealer that has conditions, terms, or requirements applied to their securities registration.

The decisions largely grant these new cryptocurrency trading platforms time-limited relief on some prospectus, trade reporting and marketplace requirements. They also require these platforms to meet fair access, transparency and investment limit requirements (among others) if the platforms want to retain their relief. Relatedly, these platforms are put on a timeline to become compliant for standard, unrestricted registration. Manitobans and Canadians can then access cryptocurrency markets through these platforms as long as the platforms operate within the terms of the restricted dealer arrangement.

From September through December 2023, three platforms either obtained time-limited exemptions to meet their prospectus requirements or attained standard registration. The Canadian Securities Administrators continue to update the list of cryptocurrency trading platforms authorized to do business with Canadians, and those authorized platforms continue to pour energy into developing the market.

These platforms provide a more direct option to access cryptocurrency markets and directly trade those digital assets. Canadians also have the option to enter cryptocurrency markets through cryptocurrency exchange-traded funds (cryptocurrency ETFs).

Cryptocurrency ETFs allow for exposure to cryptocurrency markets without the expenses of direct ownership and offer a convenient way to enter these markets when compared to many cryptocurrency trading platforms. In exchange for these advantages, cryptocurrency ETFs come with slightly higher custodial and management fees than standard ETFs. Additionally, cryptocurrency ETF investors don’t have the anonymity or control that direct cryptocurrency owners normally would.

In early 2021, Canada’s securities regulators approved North America’s first Bitcoin ETF, and it doesn’t appear to be slowing as major investment management companies continue to develop cryptocurrency ETFs. In addition to the growing number of cryptocurrency ETFs in Canada, these decisions and the market development on the horizon demonstrate that the cryptocurrency market is still progressing despite its inherent volatility. Time will tell if this leads to more stable conditions in this market than we have seen to this point.

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