Ontario’s financial regulator has alleged that the KuCoin exchange has broken securities laws, and states that it will be tough on any crypto entity that flouts regulation.
KuCoin has become the latest exchange to face scrutiny from a regulator, with Ontario’s financial regulator alleging that the exchange has disregarded securities laws. The notice indicates that the regulator will take stern action against any crypto entity that flouts financial laws.
KuCoin under fire
The Ontario Securities Commission claims that, in offering securities and derivatives products to Ontario residents without registration and disclosure, KuCoin has broken securities laws. The regulator referenced a notice sent to crypto platforms that they must comply with the regulation by April 19, 2021. KuCoin failed to contact the commission by this date, according to the statement.
The specific allegations state that KuCoin has engaged in “the business of trading in securities without the necessary registration or an applicable exemption from the registration requirement,” as well as a lack of complication with prospectus requirements and activity that is “contrary to the public interest.”
The Ontario Securities Commission has been cracking down on the crypto market by targeting platforms that do not register or comply with other laws. This was why it published the notice asking crypto trading platforms to contact it.
Recently, it published a similar statement against Poloniex, which also failed to contact the regulator by April 19. That hearing will take place on June 18. Like KuCoin, Poloniex is based abroad, but has an active user base in the country.
The regulator used the same language in its filing against Poloniex. This scrutiny of exchanges comes at a time when governments the world over are tackling cryptocurrency regulation — and it is likely more such filings will occur.
Cryptocurrency exchange regulation a hot topic
With the cryptocurrency market now firmly in the mainstream, governments are concerned for investors who have to endure market volatility and projects that are potentially scams. Investors protection and volatility are key ideas behind regulation, and this has been stated by officials from Canada, the United States, and South Korea.
In fact, South Korea is pioneering a series of regulatory standards, having issued many notices to that end in recent months. The country’s financial regulator recently gave exchanges until September to comply with new regulatory laws, following which the exchanges would become completely regulated.
That regulation has come with some stiff restrictions for exchanges, however, which are not happy with some of the changes — leading to OKEx ceasing operations. As for Canada and the US, it is likely they will follow with a similar sort of framework. The two nations have only just begun tackling regulation.