The successive crises in the crypto ecosystem are pushing regulators to take drastic measures. After controversial debates, the Canadian Securities Regulators decide to take matters into their own hands and protect investors. For this, new rules are needed!
FTX Collapse Scares Canadian Regulators
Many upheavals are occurring in the crypto ecosystem, and in the face of this, Canadian regulators decide to react. According to statements by the Canadian Securities Administrators, crypto exchanges will now have to follow certain rules. The fall of FTX has weakened the industry and perhaps the oversight regime instituted by the CSA should address the shortcomings.
According to’announcement made on Monday, cryptocurrency exchanges wishing to register will be required to sign pledges. These are to comply with investor protection. Thus, the pre-registration undertaking must include the promise that client funds will be held by a reliable custodian. The exchange must not use it for its exclusive activities.
Then, they will have to agree to be officially under regulatory supervision. Regulators also specify that cryptocurrency exchanges must not offer margin. Indeed, it is prohibited to offer leverage to Canadian investors. However, the new rules do not only apply to exchanges present in Canada.
According to the watchdogs, even those located outside, but which carry out operations on the territory, will have to apply these new measures. Otherwise, the CSA will be obliged to use all the options necessary for the trading platform to comply with the standards.
Since the collapse of QuadrigaCX in 2019, Canadian regulators have been scrambling to close the loopholes. However, differences of opinion dragged things out. Given everything the industry is going through right now, a hard line seems like the best option.
Although the CSA is putting pressure on crypto exchanges to protect investors, investors should remain cautious. It is their money that is at stake.catastrophic collapse of FTX sufficiently proves the uncertainty of the ecosystem. They should consider better protecting themselves.
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