OSC seeks new fees for crypto firms

With crypto-trading platforms seeking to join the regulated world, the Ontario Securities Commission (OSC) is proposing new fees to offset the costs of vetting these firms.

In a notice, the OSC proposed a new fee of $24,500 for restricted dealers when they become registered and when they apply for exemptive relief to operate as a marketplace.

Currently, crypto firms are paying approximately $2,600 in registration fees — well below the estimated added cost to register them as dealers with terms and conditions.

Similarly, firms seeking exemptions to operate marketplaces are paying either $4,800 or $7,000, depending on the sort of relief being sought, which is also well below the added cost of these applications.

Under the proposed new fee structure, crypto firms that operate marketplace platforms will face $49,000 in added fees, with additional fees to both register as a restricted dealer and to secure exemptions for performing marketplace functions.

“Novel businesses, which include [crypto platforms], require significant resource efforts to initiate compliance discussions, including understanding these entities’ novel business models and imposing detailed obligations to mitigate investor protection risk,” the regulator stated.

While the OSC typically reviews its fee structure every three years, the proposed new fees for restricted dealers are being introduced outside of the normal cycle to “align fees to the higher costs being incurred by the OSC to onboard restricted dealers,” it said. The changes also address the risk that the added costs are being subsidized by firms in other sectors, it said.

Alongside the new fees for crypto firms, the proposed changes extend certain fee requirements to people and firms that aren’t registered but should have been. This means firms and individuals that don’t comply with registration requirements will become responsible for paying the fees that they should have paid had they been in compliance.

The OSC is seeking comment on the proposals by Feb. 7, 2024, and expects the new fees will take effect on July 2, 2024.

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.