The Canadian Securities Administrators (CSA) recently published guidance to help fund managers understand and comply with securities law requirements for public investment funds holding crypto assets (public crypto asset funds).
The guidance aims to provide “an overview of public crypto asset funds operating in Canada and describes related oversight initiatives by CSA members.”
The notice also covers the following:
- Market characteristics of crypto assets that could impact their viability as investments for public crypto asset funds
- Expectations concerning custody of crypto assets held on behalf of a fund
Issues relating to yield-generating activities, like staking, by public crypto asset funds - Know-your-client, know-your product and suitability obligations with respect to public crypto asset funds.
Stan Magidson, CSA Chair and Chair and CEO of the Alberta Securities Commission, said:
“We encourage stakeholders to review this guidance to better understand our expectations of public crypto asset funds. It is important for such funds to clearly understand their existing regulatory obligations given recent events in the crypto market.”
CSA Staff Notice 81-336 Guidance on Crypto Asset Investment Funds that are Reporting Issuers is available on CSA members’ websites.
The CSA reminds Canadian residents and consumers that “investing in crypto assets, even through public investment funds, is higher risk and may not be suitable for most retail investors.”
Generally speaking, investing in crypto assets is considered to be “a speculative activity, and the value and liquidity of crypto assets are highly volatile.”
While regulatory oversight of public investment funds plays an important role in investor protection, these measures “cannot eliminate all risks associated with investing in crypto assets.”
The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation “for the Canadian capital markets.”
The Canadian Securities Administrators (CSA) is “the umbrella organization of Canada’s provincial and territorial securities regulators whose objective is to improve, coordinate and harmonize regulation of the Canadian capital markets.”
It aims to achieve consensus “on policy decisions which affect our capital market and its participants.”
It also aims to “work collaboratively in the delivery of regulatory programs across Canada, such as the review of continuous disclosure and prospectus filings.”
