Canadian Securities Administrators Further Extend Compliance Deadline in Interim Approach to Value-Referenced Crypto Assets

On September 26, 2024, the CSA provided a further update for crypto asset trading platforms (CTPs) that are registered, or that have provided a pre-registration undertaking (PRU), on the interim approach set out in Staff Notice 21-333 – Crypto Asset Trading Platforms: Terms and Conditions for Trading Value-Referenced Crypto Assets with Clients (“SN 21-333”). SN 21-333 addresses the application of terms and conditions in registration and exemptive relief decisions or PRUs related to “Value-Referenced Crypto Assets” (VRCAs). Details concerning SN 21-333 can be found in our Updates, Canadian Securities Administrators Announce Guidance on Trading of Value-Referenced Crypto Assets for Crypto Trading Platforms and Canadian Securities Administrators Announce Enhanced Pre-Registration Undertaking Requirements for Crypto Trading Platforms.

In SN 21-333, the CSA set a deadline of April 30, 2024, after which registered CTPs, or CTPs that have provided a PRU, could no longer allow their clients to buy, deposit or enter into crypto contracts to buy or deposit, VRCAs that seek to replicate the value of a single fiat currency (FBCAs), unless such FBCAs comply with the interim terms and conditions set out in SN 21-333. That deadline, initially extended to October 31, 2024, has been further extended to December 31, 2024.

This extension is intended to provide more time for CTPs to either comply with the terms and conditions of their registration and exemptive relief decisions, or their PRUs, or to propose alternatives that address investor protection concerns, provided any alternatives are in place or substantially finalized before December 31, 2024.

The CSA indicated that it also remains open to considering exemptions relating to specific use cases for VRCAs that do not raise investor protection concerns.

After December 31, 2024, registered CTPs, or CTPs that have provided a PRU, can only offer VRCAs that comply with the conditions of their registration and exemptive relief decisions, or their PRUs. The CSA also reminded CTPs that the previous requirement to no longer allow clients to buy, deposit or enter into crypto contracts to buy or deposit VRCAs other than certain FBCAs by December 29, 2023 is unaffected by this extension to December 31, 2024.

For further information on the implementation of SN 21-333, please contact any member of our Financial Services Regulatory Group or Technology Group.