Within days after the U.S. Securities and Exchange Commission (SEC) placed restrictions on crypto-related activities, regulators in Canada are set to bring in tougher rules for exchanges in the country.
The Canadian Securities Administrators (CSA) will soon introduce a new set of rules that crypto exchanges need to follow to operate in its jurisdiction. This news comes amid increasing regulatory purview from governments across Europe and Asia. On the other side, the crypto market is buoyed by a surge in bitcoin price, which is currently at its highest in around eight months.
This comes amid concerns among industry players about the danger of letting US-based crypto businesses out of the country, amid fears of regulatory tightening. Recently, the SEC placed a restriction on crypto exchange Kraken’s staking program. Kraken was charged with offering the staking service, while the assets were offered as unregistered securities.
With this, the exchange had to shut down the service in the US while also making a $30 million fine as part of a settlement.
The new rules will make it expensive for crypto exchanges to conduct business in Canada, essentially discouraging the industry and also protecting user investments with high taxes and tighter rules.
Although the plans were already underway since 2022, the FTX collapse had only acted as a catalyst for quicker implementation. The Canadian regulators are expected to reveal additional details on the new guidelines shortly.
The new rules are potentially aimed at replicating a similar environment in Canada after the US SEC recently proposed stricter rules for businesses that secure assets for fund managers, which directly affect crypto exchanges operating in the US. Hence, a similar regulatory framework in Canada could potentially trigger crypto businesses to migrate elsewhere from North America.