OSC’s Advisory Panel Pushing for Stronger Regulation of Crypto Platforms

A major theme of Ontario’s Investor Advisor Panel’s (IAP) Annual Report was the impact of technology on investors. The IAP specifically emphasized technology’s negative impacts following the collapse of FTX, a cryptocurrency exchange. 

In its report, the advisory panel cautioned the Ontario Securities Commission (OSC) against “placing the goal of fostering innovation ahead of its central investor protection mandate,” calling for a two-pronged approach by the regulator. The IAP called for an increased focus on educating market participants on the risks associated with crypto investing, coupled with innovative and timely securities regulation to keep pace with this rapidly shifting investment environment. 

The panel also endorsed the Canadian Securities Administrators’ (CSA) recent strengthening of its regulatory approach to crypto trading platforms in the wake of the collapse of FTX. These measures include new guidance regarding stablecoins and investor limits. In a statement following the notice of the CSA’s new measures, CSA chair Stan Magidson (also chair and CEO of the Alberta Securities Commission) said: “Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada.” 

It remains to be seen what further actions the OSC will take to protect investors with respect to this burgeoning sector, however it is clear that there continues to be a push for further regulation in this area while continuing to foster further innovation.