Promises, Promises – CSA Enhances Requirements For Crypto Asset Trading Platforms

On February 22, 2023, the Canadian Securities Administrators published CSA Staff Notice 21-332 Crypto Asset Trading Platforms: Pre-Registration Undertakings – Changes to Enhance Canadian Investor Protection (the Platform Notice). The Platform Notice impacts crypto asset trading platforms operating in Canada that are seeking registration, all of whom are required to file a pre-registration undertaking. These undertakings already include obligations that the platforms will operate in a certain manner as they seek registration, and the Platform Notice introduces new commitments the CSA will expect to see. These new commitments include those relating to the custody and segregation of crypto assets and preclude the platform from offering margin, credit or other forms of leverage to clients, enhanced financial reporting to the CSA, and prior approval from the CSA before buying or depositing certain assets (such as stable coins).