CSA issues new guidance for stablecoins

Ahead of a looming deadline for crypto trading platforms to stop dealing in stablecoins, Canadian securities regulators issued guidance to issuers and trading platforms that will allow them to continue trading cryptoassets that are directly backed by traditional fiat currencies.

In a staff notice, the Canadian Securities Administrators (CSA) set out new guidance for the crypto sector on the conditions that issuers and trading platforms must adhere to in order to keep trading these assets with Canadian investors.

By Dec. 29, firms are expected to stop trading in stablecoins that are not directly backed by fiat currencies; by April 30, 2024, trading in fiat-backed crypto must comply with the conditions set out in the CSA’s new guidance.

“Today’s notice sets out interim terms and conditions that would apply to cryptoasset trading platforms and the issuers of fiat-backed cryptoassets if they wish to continue allowing Canadian clients to purchase or deposit these assets,” the regulators said in a release.

The CSA noted that the guidance was developed with feedback from crypto firms and was informed by international efforts to devise standards and regulations for the fledgling sector.

Among other things, the guidance requires stablecoin issuers to maintain adequate reserves with a qualified custodian, and requires both issuers and trading platforms to publicly disclose certain information about their governance, operations and reserves.

“The transparency of value-referenced cryptoassets about the composition and adequacy of their reserves and their governance are critical issues that must be addressed to protect Canadian investors and the integrity of our capital markets,” said Stan Magidson, chair of the CSA, and chair and CEO of the Alberta Securities Commission, in a release.

“This interim framework, which we will build upon in the future, sets certain standards to help ensure that investors receive the information they need about the assets they are purchasing, including the risks associated with them,” he said.

The CSA said it also welcomes input on the appropriate rules for regulating stablecoins in the long term.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.