Canadian authorities have issued a guideline for crypto trading platforms. The guideline covers marketing practices, securities violations, gambling style contests, and social media use.
The Canadian Securities Administrators (CSA), the country’s regulatory body for securities, published a guideline for crypto trading platforms on Sept 23. The document concerns the requirements for advertising, marketing, and social media use, among other things.
Crypto exchange concerns
The notice was jointly issued by the CSA and the Investment Industry Regulatory Organization of Canada. These entities cite the publishing of a guideline was necessitated because of “certain advertising activities and marketing strategies by platforms that trade crypto assets.” They are concerned that some trading platforms and crypto exchanges may be violating securities requirements and raising investor protection concerns.
On a high level, the guideline covers advertising and marketing information that could be false or misleading, gambling-style contests, the use of social media to promote trading platforms, and the general compliance with securities laws.
The notice is aiming to deter any marketing that encourages excessive trading for fear of missing out. In terms of gambling-style events, regulators want to prevent rewards based on bonuses, time limits, and trading levels. These kinds of events are popular in the market and are often used by newly launched platforms to grow the user base.
The CSA and IIROC’s worries are similar to that of the United States Securities and Exchange Commission (SEC). The latter has also been reiterating the need for measures that ensure investor protection. The U.S. is expected to release regulatory guidelines in the months to come.
Investor protection, disingenuous marketing priorities for regulators
Regulatory bodies and large tech firms have both been concerned with the marketing and outreach of crypto platforms. The primary issue is the prevalence of scams, which often prey upon uninformed investors who find it hard to differentiate between a legitimate platform and a fraudulent one.
These kinds of incidents continue to occur, most recently with the hacking of the Bitcoin.org website. The website’s attackers placed a pop-up on the site telling individuals to donate bitcoin, for which they would receive double the amount. The website was quickly taken down.
The U.S. SEC Chairman Gary Gensler doesn’t see long-term viability for thousands of cryptocurrencies that blatantly flout rules. He has also detailed an agenda that the regulators could use in their bid to regulate the cryptocurrency market.
While the market is no longer the wild west that during the 2017 ICO boom, it still suffers from a hefty amount of unethical business practices. With regulation, analysts and insiders believe that the crypto market will be granted greater legitimacy and a more healthy path towards growth.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.