Coinsquare is the first crypto-only trading platform to be registered with IIROC (Photo by Justin Tallis/AFP) (Photo by JUSTIN TALLIS/AFP via Getty Images)
Cryptocurrency trading platform Coinsquare crossed the finish line to become a member of the Investment Industry Regulatory Organization of Canada (IIROC) for the first time in the Canadian crypto sector.
The regulator announced late Wednesday afternoon that Coinsquare is now registered as an investment trader.
The new listing will bring a number of changes to the exchange.It will have to segregate the client’s assets entirely through a licensed and insured custodian, be subject to stricter operating controls, keep more capital on hand, and report regularly on the state of its balance sheet.
This also means that cash held in clients’ trading accounts will be secured by Canadian investment protection funds.
“Personally, I think it’s a pretty big deal,” said Matt Burgoyne, Partner and Co-Head of Digital Assets and Blockchain at Osler and Hoskin & Harcourt LLP.Yahoo Finance Canada In a phone interview.
“[IIROC] It is historically a very conservative organization that licenses investment broker dealers.So, the most traditional financial sector.The International Investment Commission (IIROC)’s welcome and acceptance of registration on a cryptocurrency exchange with retail users is a very important development in the world of securities and in the world of cryptocurrency.”
Coinsquare has also been approved to operate an automated trading system, allowing it to facilitate the trading of illiquid currencies, a common practice in traditional stock markets.
The platform will not be able to offer margin trading or short selling, although it plans to work towards being able to offer these services in the future.
However, the ability to trade on margin could add more risk to the already volatile world of cryptocurrency.
Burgoyne says there will likely be more “risk disclosure and user education that the platform conveys” if Coinsquare is to offer leverage.
The company will not offer products like bitcoin exchange-traded funds, and customers will only be able to purchase crypto assets with a maximum of $30,000 in most counties.
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“For the first time, Canadians have the opportunity to invest in crypto assets, knowing that they are fully protected from IIROC,” Martin Biszel, CEO of Coinsquare, said in a press release.
Coinsquare says it serves more than half a million Canadian customers.
The need to protect investors in the cryptocurrency trading world has always been at the forefront amid high-profile thefts of client assets and the myriad of cryptocurrency-related frauds and scandals.
Just this week, trading platform Mango Markets reported that $100 million in funds was stolen during a cyber breach.
In 2021, securities regulators deemed cryptocurrency exchanges already within their jurisdiction and required them to register as Restricted Dealers to continue operating their markets.The regulators also gave the platforms two years to work towards becoming registered as investment dealers with IIROC, the highest class of registered securities dealers.
All cryptocurrency exchanges that are currently registered as Restricted Dealers are working on their Investment Dealer registration with IIROC.
Internationally, Burgoyne says this brings Coinsquare a step closer to being better competitive.
“The competitors to Canadian crypto exchanges are large international crypto exchanges located offshore and offering all these different services and products such as margin, futures trading, and leverage,” he said.
“Currently, not all regulated Canadian exchanges can expand margin, credit or other forms of leverage, so they are losing a competitive advantage to large international offshore exchanges.
We hope that IIROC-registered Canadian exchanges such as Coinsquare will soon be able to offer margin and leverage Finance that would play a minor role.”
Michele Zadekian is a senior reporter at Yahoo Finance Canada.Follow her on Twitter Tweet embed .
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