The Canadian Securities Administrators (CSA) updated stablecoin regulations for crypto asset trading platforms. This latest development comes as the CSA extended the compliance deadline for registered firms to meet new conditions or propose alternatives to protect investors.

CSA Extends Compliance Deadline

Investors have endured significant losses due to the collapse of unregulated stablecoins and the actions of unregistered crypto market participants.

Despite global efforts to develop payment-based and banking-based regulatory frameworks for these assets, Canada lacks a structured regulatory regime addressing the crypto asset class. The CSA, however, remains focused on protecting Canadian investors from the risks posed by trading these assets.

The CSA has now extended its previous deadline of October 31, 2024, to December 31, 2024, reportedly due to technical challenges faced by CTPs. This gives platforms additional time to either comply with the required terms or propose alternative measures to safeguard investors.

CSA provides update to crypto asset trading platforms about value-referenced crypto assets: https://t.co/YYXkfF8Dbd pic.twitter.com/MM2Fr5nAP6

— CSA_News (@CSA_News) September 26, 2024

A recent notice by the CSA set out the conditions for trading fiat-backed cryptocurrencies to mitigate investor risks. By December 29, 2023, CTPs were instructed to halt trading of any stablecoin other than those backed by a single fiat currency. Despite this, holding VRCAs on Canadian platforms still doesn’t provide the same protections as regulated deposits, the CSA warns.

“The CSA has actively engaged with CTPs and crypto industry participants and remains open to proposals for alternative ways to address investor protection concerns raised by VRCAs,” the regulator wrote.

“To that end, the CSA is further extending the October 31 deadline to December 31, 2024. The extension is intended to provide more time for CTPs to either comply with the terms and conditions of their registration and exemptive relief decisions or to propose alternatives that address investor protection concerns.

Regulatory Uncertainty Remains

Although several international jurisdictions are working on regulatory frameworks for stablecoins, Canada remains in limbo regarding a concrete structure for these assets. The CSA’s recent actions highlight the uncertainty and caution surrounding the trading of unregulated or partially regulated cryptocurrencies in Canada.

The CSA advised investors to stay informed about the risks of crypto assets, which, unlike traditional fiat currencies like the Canadian or U.S. dollar, can be highly volatile. The regulator has provided more details and educational resources on its investor tools crypto assets page as it continues to coordinate regulations across Canada’s capital markets.

The CSA’s approach highlights the growing regulatory scrutiny faced by crypto platforms in Canada as the regulator balances promoting innovation and protecting investors.