CSA Provides Advertising, Marketing and Social Media Guidance for Crypto-Trading Platforms
On September 23, 2021, the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) provided detailed guidance directed at the marketing practices of Crypto-Trading Platforms (CTPs). Joint CSA/IIROC Staff Notice 21-330 Guidance for Crypto-Trading Platforms: Requirements relating to Advertising, Marketing and Social Media Use (“Staff Notice 21-330”) provides an overview of the principal requirements under securities legislation and IIROC rules pertaining to the advertising and marketing strategies of registered and prospective CTPs.
Scope of Staff Notice 21-330
The Staff Notice 21-330 is intended to provide guidance to:
- CTPs that are registered as a dealer under securities legislation (“registered CTPs”);
- CTPs that have or will be applying for registration as a dealer but are not yet registered (“prospective CTPs”); and
- other registrants that may be considering establishing a CTP as a new business line.
The Staff Notice addresses:
- statements in advertising or marketing that could be considered false or misleading;
- the use of gambling-style contests, promotions or schemes, such as the offering of bonuses or rewards based on the level of trading;
- compliance and supervisory challenges when using social media to promote CTPs; and
- complying with securities legislation generally.
False or Misleading Advertising
Securities legislation and IIROC rules contain provisions prohibiting false or misleading statements in advertising or marketing materials. These prohibitions apply to the making of statements:
- that suggest a CTP is registered under securities legislation where this is not the case;
- that suggest a securities regulatory authority or regulator has approved or endorsed the CTP, any products offered on the CTP or any disclosure or other representation made by the CTP; or
about any matter that a reasonable investor would consider relevant or important in deciding whether to enter into or maintain a trading or advising relationship with the CTP if the statement is untrue or omits information necessary to prevent the statement from being false or misleading.
“Gambling Style” Promotions and Schemes
Staff Notice 21-330 cautions registered CTPs that as gatekeepers of the capital markets, they should not engage in conduct that brings the market into disrepute. As such, advertising or marketing designed to encourage excessively risky trading may violate the registrant’s obligation to treat clients fairly, honestly and in good faith.
Advertising that could be considered to inappropriately encourage investors to engage in excessively risky trading include contests, promotions, bonuses and time limits, as they incentivize investors to trade and act quickly for fear of missing out on an investment opportunity or reward.
Social Media – Policies and Procedures
CTPs are expected to consider compliance and supervision when using social media websites and platforms. CTPs are required to adopt policies and procedures governing the use of social media for marketing purposes. These policies should provide for:
- the review, supervision, retention and retrieval of advertising and marketing materials, including marketing done on social media platforms;
- the designation of an appropriate individual to be responsible for the supervision or approval of marketing communications; and
- a system to monitor compliance with policies and procedures, including record retention and retrieval capability.
Implications
Staff Notice 21-330 clarifies which CTP marketing activities are acceptable under securities legislation and IIROC rules, with the expectation that registered and prospective CTPs will conform their practices to meet these requirements. The policies in the Staff Notice are not new, but rather consolidate a number of provisions and accordingly, no transitional period has been offered. Immediate compliance is encouraged as securities regulators are becoming increasingly focused on CTP advertising in the Canadian market.
Expertise
Authors
Insights
-
Technology
Bluesky Rolls Out New Community Guidelines
Bluesky, a social network competitor of X, Threads and other open networks including Mastodon, is revisiting its community guidelines and other user policies to provide more clarity around user safety… -
Technology
Perplexity AI’s All-Cash Bid for Google Chrome
AI startup Perplexity AI has made an unsolicited US $34.5 billion bid to acquire Google’s Chrome browser. With over three billion users, Chrome is currently the most popular browser in the world… -
Technology
Concordia University Students Launch ‘Starsailor’ Rocket from Northern Quebec
Students from Concordia University’s Gina Cody School of Engineering and Computer Science recently launched “Starsailor,” a rocket that a team of over 700 members developed over the past seven years… -
Technology
BC’s Mushroom-Plucking Robots Harvest Big in Latest Round of Fundraising
4AG Robotics, a British Columbia-based start-up that uses robots to harvest commercially grown mushrooms, has received a C$40 million venture capital investment to further develop its fungi-focused… -
Technology
Canada’s New Virtual Hub for Wildfire Innovation and Knowledge Exchange
With the increasing threat wildfires pose to the safety, health and economic wellbeing of Canadians and ecosystems across the country, the federal government has established the Wildfire Resilience… -
Technology
The Modernization of Estate Planning with "Trusty"
With many Canadians lacking a will, Trusty, a Toronto-based startup, aims to revolutionize estate planning by leveraging artificial intelligence (“AI”) and technology. Founder Randy Frisch created the…
Featured Work
-
Mergers and Acquisitions
Dayforce to be taken private by Thoma Bravo for US$12.3 billion
Goodmans LLP is advising Dayforce, Inc. as Canadian counsel in connection with its definitive agreement to be taken private by Thoma Bravo in an all-cash transaction with an enterprise value of… -
Banking and Financial Services
ATW Partners provides US$100 million financing facility to Matador Technologies Inc.
Goodmans LLP acted for ATW Partners in connection with a convertible note facility pursuant to which ATW will provide funding of up US$100 million to Matador Technologies Inc… -
Capital Markets
Desjardins Capital Markets leads $115 million bought deal offering for Kraken Robotics
Goodmans LLP acted for the underwriters in connection with a bought deal short form prospectus offering of 43.24 million common shares of Kraken Robotics Inc. for gross proceeds of approximately C… -
Technology
OverActive Media completes acquisition of KOI and Movistar Riders
Goodmans LLP acted as legal advisor to OverActive Media Corp. in connection with its strategic all-share acquisition of certain esports assets of Goatch Global, S.L. (operating as "KOI") and all of… -
Technology
Canapi Ventures leads Series B investment round in FISPAN
Goodmans LLP acted for Centerharbor Canapi Ventures Investment Advisor LLP (“Canapi Ventures”) in connection with its $30 million Series B funding in FISPAN Services Inc., the industry leader in… -
Technology
WonderFi Technologies Inc. to be acquired by Robinhood Markets, Inc.
Goodmans LLP is advising the Special Committee of independent directors of the board of directors of WonderFi Technologies Inc. in connection with its agreement to be acquired by a wholly owned…
News & Events
-
Communications and Media
Goodmans Once Again Recognized in the Lexpert Special Edition: Technology 2025
We are pleased to announce the Lexpert Special Edition: Technology 2025 once again names Goodmans lawyers among Canada's top-ranked experts.Congratulations to our 15 featured lawyers:Amalia… -
Aging and Healthcare
The Canadian Legal Lexpert Directory 2025 Once Again Recognizes Goodmans
We are proud to announce Goodmans LLP continues to be recognized in the 2025 edition of The Canadian Legal Lexpert Directory.Congratulations to the 96 Goodmans lawyers recognized as leaders across… -
Banking and Financial Services
Chambers and Partners Once Again Honours Goodmans with Global Recognition
We are proud to announce Goodmans LLP continues to receive top-tier recognition from Chambers and Partners in the Chambers Global 2025 Guide released today.Recognition from Chambers and Partners is…