Recently, the Canadian Securities Administrators, in collaboration with the Investment Industry Regulatory Organization of Canada (IIROC), have issued guidance about the application of securities legislation and regulatory requirements to crypto assets.

Here are some scenarios in which securities law may apply:

If crypto assets that are securities or derivatives are traded on a crypto asset trading platform, the CTP would be subject to securities legislation. In addition, if a CTP trades contracts or instruments that are derivatives based on crypto assets, the CTP would also be subject to securities legislation.

A CTP does not provide immediate delivery of the crypto asset, creating an ongoing reliance and dependence on the platform by the user. If a CTP stores a user’s crypto assets in a wallet controlled by the platform, creating an ongoing reliance on the CTP to trade or transfer the crypto assets, this creates a contract subject to securities law.
If an ICO issues security tokens, securities laws may apply.

This list is not exhaustive. A number of circumstances may trigger the application of securities legislation. As such, the application of securities legislation is often determined on a case-by-case basis.

For more details about regulation of crypto assets and crypto asset trading platforms, please review the following: