CSA Bans Crypto Firms in Canada From Providing Leverage Trading Services

The cryptocurrency exchanges that aim to register in Canada will be required to comply with the country’s stricter regulations, which include a prohibition on providing margin or leverage trading services, as per the Canadian Securities Administrators (CSA).

According to the additional parameters stated by the CSA on Monday, firms will also be required to maintain the assets of Canadian clients apart from their proprietary company busines. 

In August, businesses dealing with cryptocurrency were informed they needed to file a pre-registration undertaking (PRU) in order to continue operating while applying for official registration. 

The CSA has stated that the deadline for submitting PRUs will be notified to platforms “shortly.” However, in light of “recent occurrences in the crypto market,” a PRU will bind platforms to stricter regulations.

The document states that “even with the adoption of these measures, crypto assets or financial products relating to crypto assets are high-risk investments.”

The CSA believes that “these risks could result from, among other things, crypto trading platform non-compliance with registration terms and conditions or undertakings, interconnectedness within the crypto sector, insolvency, hacks, price volatility, and uncertain value propositions for individual assets.”

CSA also stated that crypto firms will have to keep client funds with an appropriate custodian so that they are safe and not mismanaged.

Canadian Pension Funds Affected by Crypto

While this is going on, authorities in charge of regulating the stock market have been increasingly focusing on unregistered companies, singling out the more prominent ones.

However, this hasn’t prevented local pension funds from being impacted by some of the biggest blow-ups in crypto this year. 

For example, Canada’s second-largest pension fund, Caisse de dépôt et placement du Québec (CDPQ), recently wrote off its $200 million investment in the failing crypto lending platform Celsius. Meanwhile, Canada’s largest pension fund, CPP Investment (CPPI), recently shut down its research efforts into cryptocurrencies.