Canada proposes changes to crypto investment fund requirements
On January 18, the Canadian Securities Administrators (CSA) released proposed changes to how public investment funds will hold crypto assets. The reforms under consideration will limit the activities of public investment funds and establish levels of supervision regarding crypto.
According to the amendments, only alternative investment funds and irreversible investment funds will be allowed to directly buy, sell or hold crypto assets. Other mutual funds may invest in those funds only to receive crypto exposure. Invested assets must be listed on an exchange recognized by a securities regulatory authority in Canada and must be liquidable.
Canadian securities regulators seek comments on rules for public investment funds holding crypto assets. pic.twitter.com/uKGSlCDD8S
— CSA_News (@CSA_News) January 18, 2024
In addition, assets must be insured and kept in cold wallets. An annual review of the trustee's internal management by a public accountant is required.
Related: Canada May Benefit as US Finally Gets BTC ETF – Coinbase exec
The changes will be incorporated into National Instrument 81-102 Investment Funds and its accompanying Company Policy. A national instrument is a regulation or order adopted in all Canadian provinces and territories. Guarantee rules are codified in national instruments as they are administered at the regional level through coordination through the CSA. According to the CSA:
“We think about it [greater regulatory clarity] Facilitate new product development in the space and ensure appropriate risk mitigation measures are built directly into the investment fund's regulatory framework.
The improvements are part of a project announced in July. The proposals will be open for comment for 90 days and will be followed by the drafting of a consultation paper and consideration of a broader regulatory framework for crypto assets.
Canada has had Bitcoin (BTC) exchange currencies since 2021.
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