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“The existence of a regulated futures market can support the ability of authorized dealers and market makers to adequately perform their market-making obligations with respect to public crypto funds that are ETFs.”
A guidance report by the CSA explains how compliance for investment funds dealing in crypto assets is being streamlined. By testing crypto ETFs in Canada, CSA suggests that they are well equipped to deal with crypto-specific price volatility.
In addition, the CSA expressed the importance of maintaining a balance between liquid assets and “illiquid assets” that cannot be easily marketed. They expect investment funds to follow exhaustive due diligence to identify whether the crypto assets they plan to invest in qualify as securities or derivatives.
“Depending on how a particular crypto-asset is characterized, […] It could limit the ability of investment funds to purchase and hold single crypto assets, as existing public crypto funds holding bitcoin and ether currently do. ”
The guidance also sets out key requirements for the storage of crypto assets. These include preconditions for primary storage in cold wallets, segregation of assets and ensuring visibility on the blockchain, mandatory compensation for corporate fraud, and regular reporting to fund auditors.
We will also explain the rules of staking. While not wholly opposed, the report states that “neither a fund nor its investment fund manager (IFM) should act as its own validator,” and all staking services should be subject to regulatory restrictions. It says it should be outsourced to a staking-as-a-service company to stay within bounds. Rules.
And while the U.S. is struggling to launch a Bitcoin spot ETF, the CSA is already making plans for when a Canadian spot cryptocurrency ETF will be accepted. The report states that “to determine spot prices, we select publicly available indices that aggregate prices from a variety of sources.” […] It helps mitigate the risk of incorrect pricing of certain crypto assets. ”
in Canada launched There are nine cryptocurrency ETFs, with the Purpose Bitcoin ETF becoming the first on February 25, 2021.
The guidance comes after the withdrawal of prominent cryptocurrency exchanges such as: dYdX, binance and Bybit from Canada earlier this year, citing regulatory concerns. The CSA’s comprehensive guidelines provide a roadmap for crypto market operations in Canada, ensuring investor protection and potentially improving how fintech and crypto work together.