Canada is restricting digital asset investments

 

Canada is 

restricting digital asset investments

The Canadian Securities Supervision Authority has issued a proposal

 for rules to guide public investment managers' participation in digital assets.

The Authority invited the Canadian public to provide comments on

 the proposed rules within a 90-day period.

The proposed rules are intended to provide clarity and regulatory guidance to

 investment funds interested in investing in digital assets either

 directly or indirectly.

The Securities Authority of Canada seeks comments on the rules of

 public investment funds that possess encrypted assets.

The Commission proposes to amend the rules to prevent mutual

 funds from investing directly in or holding digital assets.

In accordance 

with the proposed framework

Only non

refundable investment funds and alternative mutual investment

 funds will be allowed to purchase, sell, retain and use digital assets.

The umbrella organization also aims to restrict the assets in which investment

 funds are allowed to invest to be listed only on exchanges

 officially recognized by CSA.

This requirement

 will exclude some major exchanges that have not received

 official registration in Canada

Some of them 

may be completely out of the Canadian market.

For example

Benance stopped supporting Canadian users in May 2023 and joined OKX

 Paxos

Bybit and other big names that failed to obtain

 a license to operate in Canada.

CSA 

also proposes to prevent asset managers from investing in 

non-replaceable assets.

UN-Women considers that non

replacement increases valuation and liquidity risks and that

 current regulatory frameworks are insufficient to cover this sector.

Nevertheless

UN-Women is ready to hear suggestions on 

specific cases where investment in these assets is permitted.

Under the new rules, Canadian investors will not be allowed to lend 

or use digital assets as collateral for loans.

On agents

the Agency's Canadian Rules propose a requirement that digital

assets be kept in a cold warehouse and maintained insurance

and that they be audited annually by a public accountant.

The Canadian Agency comments: 

We believe that these proposals

 could contribute to the development of new products in this area.

while ensuring that appropriate risk reduction measures 

are followed directly in the regulatory framework of investment funds .

Regarding comments on these proposals

CSA President 

Stan Magedson stated that the umbrella body was aware of

 the need to develop regulations with changes in the financial services sector.

Magedson

who is also the chief executive of the Alberta Securities Authority

said:

The formal introduction of these basic requirements

 will contribute to greater clarity for fund managers

as we continue to assess whether there 

is a need for a more inclusive system ".