- Canadian authorities have released regulations to guide crypto trading platforms and exchanges.
- The guide addresses marketing, advertisements, social media use and security.
The Canadian Securities Administrators (CSA) has released a set of guidelines for crypto trading platforms operating in Canada. The Guidance for Crypto-Trading Platform was jointly issued by the CSA and the Investment Industry Regulatory Organization of Canada (IIROC). Published on the 23rd of September, the guide addresses the prerequisite for marketing and advertising. The rules also discuss the use of social media, security violations, and other crypt-related activities.
CSA and IIROC state reasons for crypto trading guidelines
According to the authorities, it was important to introduce rules to govern crypto trading platforms in Canada. The bodies said that the marketing strategies and the advertising activities of certain platforms triggered the need for the published guidelines. The CSA and the IIROC stated their concern about crypto trading platforms violating the securities requirements in Canada. The regulators said some exchanges are also guilty of triggering concerns for investors’ protection.
As stated in the guideline, the Notice covers four major subjects. Firstly, the regulation focuses on marketing and advertising material that could be false or misleading. Also, CSA and the IIROC aims to address the use of gambling-style contests by crypto trading platforms and exchanges. This way, crypto platforms offer rewards to users based on their level of trading. Hence, retail investors try to make numerous trades to win the rewards. Mostly, new trading platforms deploy this method to attract new retail investors and grow their user base. To buttress the point, the authorities gave an example in the guide:
A promotion involving a bonus scheme may offer a financial reward or a bonus interest in a particular type of crypto asset for the first 500 investors who take an action within the next 24 hours. We are concerned that some of these strategies may inappropriately encourage investors to engage in excessively risky trading, taking on risks that they would normally avoid.
Furthermore, the new guideline provides regulation for social media use to promote crypto trading platforms. Additionally, the Notice gave details on adhering to securities legislation.
Growing insecurity in the crypto space
Similarly, the US Securities and Exchange Commission (SEC) has shown repeated concern over crypto investors’ protection. The SEC has constantly been calling for crypto regulations in the US. Generally, regulatory bodies are concerned about security for crypto investors as uninformed investors keep falling victims to scams.
Recently, the Bitcoin.org website was penetrated by hackers. The attackers created a pop-up on the website asking for Bitcoin donations. The attraction was that donors would get double their donations. In addition, the scammers said that the reward was for the first 10,000 users to make it appear more legit.
Hackers also pose to be well-known figures in the crypto space to deceive people and get their money. While some stolen funds get recovered, more is lost in the wind.