Countdown to April 19: Crypto Asset Trading Platforms Must Comply with Disclosure Requirements

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As Canada’s crypto asset trading platforms (CTPs) prepare for April 19, they must also ensure compliance with disclosure requirements for reporting issuers, as set out in Staff Notice 51-363 Observations on Disclosure by Crypto Assets Reporting Issuers. The countdown has begun, and CTPs are urged to review their policies and procedures to avoid regulatory non-compliance.

Impact on Companies Operating in Canada

Only Fidelity Clearing Canada is permitted to trade in crypto assets as an Investment Dealer under the Investment Industry Regulatory Organization of Canada (IIROC). Five CTPs have obtained registration as Restricted Dealers under securities laws, subject to certain terms and conditions. BLG acts for several of these entities.

Digital Asset Companies and the Capital Markets

2021 was a significant year for Canadian capital markets, with numerous new companies listing publicly through direct listings or business combinations. The number of exchange-traded funds (ETFs) and corporate listings dealing in bitcoin and ether has skyrocketed since the first bitcoin ETF was approved in February 2021.

Token Issuances

As CSA Staff Notice 46-308 highlights, issuers must exercise caution when contemplating initial coin offerings and token issuances. However, a resurgence of compliant token offerings has been observed, with some companies issuing utility tokens to facilitate exchanges within their game or platform, and others representing securities on the blockchain.

Proposed Federal Bill

Bill C-249 Encouraging the Growth of the Cryptoasset Sector Act was introduced in February 2022, aiming to develop a national framework to encourage the growth of the cryptoasset sector. The bill requires the Minister of Finance to consult with provinces and territories within three years.

Industry Insights from BLG’s Cryptocurrency & Blockchain Group

BLG has been actively involved in the digital asset space since 2017, advising private and public investment funds, and digital asset companies on mergers and acquisitions, subscription receipt financings, private placements, and public offerings. Our team is committed to supporting businesses navigating this evolving landscape.

Stay Ahead of Regulatory Requirements

With the countdown to April 19 underway, CTPs must prioritize compliance with disclosure requirements for reporting issuers and advertising and marketing regulations. Reach out to BLG’s Cryptocurrency & Blockchain Group to learn more about the growing digital assets market and how it may impact your business.