As crypto trading platforms (CTPs) near a crucial deadline, the cryptocurrency market in Canada is seeing a significant upheaval. Time is running out for Canadian crypto exchanges to submit their CIRO membership applications. The Canadian Investment Regulatory Organization (CIRO) and Canadian Securities Administrators (CSA) sent a reminder in a press release.
The situation is caused by temporary crypto dealer regulations that began in March 2021. With the end of these interim restrictions in sight, Canadian authorities are seeking a longer-term, all-encompassing solution. To legitimise and standardise Canadian crypto exchanges in the financial sector, full CIRO participation is essential.
Canadian Trading Platforms Treated Like Their Traditional Colleagues
To give CTPs time to get their CIRO membership in order, a staff notice was released in March 2021. Thus allowing them to function as restricted dealers for the time being. Crypto platforms needed some breathing room to adjust their business models to meet the rigorous standards of investment dealers. So, they came up with this short-term solution. The authorities are making it clear, nevertheless, that this grace period will soon be over.
The regulators noted, “Given the time that has passed, CSA members expect CTPs to have carefully reviewed and understood the requirements to become investment dealers and CIRO members and be actively engaged with CIRO on their applications.”
It will not be possible to provide new CTPs time to become members of CIRO before they join the market. Obtaining CIRO membership is just the beginning of the regulatory hurdles that CTPs must overcome. Each jurisdiction also requires registration. To stay in business lawfully, Canada’s current 15 CTPs must determine how to comply with these new regulations.
The first CTP to become a member of what is now CIRO was the Canadian cryptocurrency exchange Coinsquare. This exchange was once known as the Investment Industry Regulatory Organisation of Canada (IIROC). Other exchanges wishing to become CIRO members can follow Coinsquare’s lead. Coinsquare applied for CIRO membership in November 2020 and received membership notice in October 2022.
Canadian Crypto Securities Regulation Taking Shape
With the CSA’s vigorous attempts to develop a solid regulatory framework, Canadian crypto law has changed dramatically. The CSA started creating pre-registration procedures for CTPs in August 2022. After this first step, in February 2023, standards were further tightened. Thus indicating heightened prudence following the demise of many high-profile crypto firms during the downturn.
Significant changes to Canadian regulation have had far-reaching effects on the cryptocurrency market. Kraken and Gemini were among the exchanges that acted swiftly to meet the new standards. However, others opted to leave the Canadian market altogether. Some platforms are finding it difficult to adapt to the changing regulatory landscape. Notable exits from the market include OKX, Paxos, dYdX, ByBit, and Binance.
Trading platforms are not the only ones the CSA is trying to regulate. The group presented guidance for investment firms with cryptocurrency holdings in July 2023. Then, in January of the following year, they produced a proposal that expanded the guidance. Since 2021, Canada has had spot Bitcoin ETFs. Canada’s holistic approach to regulating the crypto environment is seen in these actions.
The Impact of CIRO Membership on the Canadian Crypto Market
Platforms are working hard to fulfill the strict criteria of CIRO. This means that investors will have better safeguards and transparency in cryptocurrency trading. To be members of the CIRO, CTPs must follow specific operating criteria. These standards include thorough risk management processes and stringent reporting requirements. It also involves strong cybersecurity safeguards.
These new standards ensure a seamless crypto trading environment in Canada and protect investors. More confidence in the cryptocurrency industry from institutional and retail investors is expected. This is due to CIRO membership’s standardisation of regulatory compliance. With this guarantee, Canadian banks may be more open to blockchain and cryptocurrencies.
Navigating the Future of Crypto Regulation in Canada
Canadian cryptocurrency exchanges are at a crossroads as the CIRO membership deadline draws near. Moving forward may include substantial adjustments to current operations. It may also involve meticulously navigating complicated regulatory constraints.
The path to CIRO membership is fraught with peril and opportunity for exchanges devoted to the Canadian market. Canadian investors and regulators may see these platforms as reputable, regulated firms after CIRO membership. However, compliance may need a significant investment of time and energy.
CIRO membership is an essential step in the ever-changing Canadian crypto regulatory landscape. The Canadian cryptocurrency industry is on the cusp of a regulatory watershed moment. Investor protections and greater clarity are on the horizon as other exchanges join CIRO. TurkishNYRadio remains dedicated to keeping you informed on the latest developments and trends in the digital asset world
