The Canadian securities regulator has joined other global counterparts to issue guidelines on how securities law may apply to cryptocurrency tokens.
In its recently published CSA Staff Notice 46-307 Cryptocurrency Offerings, the Canadian Securities Administrators (CSA) has outlined how securities law requirements may apply to Initial Coin Offerings (ICOs), tokens, cryptocurrency investment funds, and the cryptocurrency exchanges trading these products.
“The technology behind cryptocurrency offerings has the potential to generate new capital raising opportunities for businesses and we welcome this type of innovation,” said Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers. “Given the growing activity in this novel area, we are publishing guidance to help fintech businesses understand what obligations may apply under securities laws.”
The notice describes the factors the regulator considers while assessing whether securities law requirements, including prospectus, registration, and marketplace requirements apply. It also details how the CSA Regulatory Sandbox could help fintech firms considering such offerings, along with the key issues that these businesses should be prepared to discuss with CSA staff.
In its official release, the CSA said:
“Any business that is planning to raise capital through an ICO or ITO, or that is seeking to establish a cryptocurrency investment fund, should consider whether it involves a security. Businesses should also contact their local securities regulatory authority to discuss possible approaches to complying with securities laws.”
This follows a recent report from the Securities and Exchange Commission (SEC) in which it said ICOs, which involve offers and sales of digital assets by virtual organisations using blockchain technology, may be subject to the requirements of the federal securities laws. The Monetary Authority of Singapore (MAS) also recently clarified that it will regulate the offer or issue of digital tokens if they constitute products regulated under the Securities and Futures Act (SFA).
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