Canadian Securities Regulator Provides Stablecoin Guidance: ‘May Constitute Securities’

In a move to provide clarity and guidance to crypto asset trading platforms, the Canadian Securities Administrators (CSA) has issued interim terms for the trading of stablecoins.

The CSA’s new guidelines, which reflect the organization’s understanding of the role stablecoins can play in Canada, may permit the continued trading of certain fiat-backed crypto assets under specific conditions.

Canada CSA Says Stablecoins Could Be Securities

Stan Magidson, CSA Chair and CEO of the Alberta Securities Commission, reaffirmed in a blog post that:

“Value-referenced crypto assets [stablecoins], which are designed and promoted to maintain a stable value over time in relation to a reference asset, may constitute securities and/or derivatives.”

The interim terms require issuers to maintain appropriate reserves of assets and make information related to governance, operations, and reserve of assets publicly available. This move also aims to safeguard investors and uphold the integrity of the Canadian capital markets. 

The CSA’s decision comes amid stricter Canadian regulations that have led to significant changes in the crypto industry. In response to these regulations, Coinbase, a US-listed exchange, halted trading for RAI Reflex Index (RAI), Dai (DAI), and Tether (USDT) in Canada on August 31, 2023.

However, the exchange continues to provide wallet access for deposits and withdrawals.

Read more: What Is a Stablecoin? A Beginner’s Guide

Crypto Exchanges Under Pressure

Coinbase’s decision to halt trading for the three tokens is a result of its ongoing asset review process to ensure adherence to listing criteria. The official email from Coinbase Canada stated,

“The trading suspension will not affect customers’ access to RAI, DAI, or USDT wallets which will remain available for deposit and withdrawal functionality after the trading suspension.”

Despite the trading suspension, Coinbase continues to make aggressive efforts to expand its presence in the Canadian market. The exchange launched several offerings, including instant fund deposits through Interac e-Transfer and a complimentary 30-day membership to Coinbase One.

Canada’s regulatory framework has seen a tightening of rules for crypto exchanges, especially following the demise of FTX. The Ontario Securities Commission has even threatened enforcement actions against non-compliant platforms.

Coinbase’s expansion plans in Canada seem to rely heavily on compliance. This also reflects the broader trend of crypto exchanges grappling with increasingly stringent regulations worldwide.