• Canadian securities regulators issue guidance on cryptocurrency exchange advertising and social media

  • The Canadian Securities Administrators, an umbrella group for the country’s securities regulators, along with a self-regulatory organization for the investment industry, has issued new guidance for cryptocurrency exchanges on the use of social media as well as advertising and marketing.

    The staff document, published Thursday in collaboration with the CSA and the Investment Industry Regulatory Organization of Canada, “provides guidance for [crypto trading platforms or CTPs] on how requirements under securities legislation1 and IIROC rules relating to advertising, marketing, and the use of social media may apply to them.”

    The advice covers the types of language used by exchanges and warns against certain formats, with a focus on so-called “gambling style promotions.”

    “We are concerned that some of these strategies may inappropriately encourage investors to engage in excessively risky trading, taking on risks that they would normally avoid,” according to the notice. “We would like to remind CTPs that registered dealers play an important role as gatekeepers of the capital markets’ integrity.” They must not engage in or facilitate conduct that brings the market into disrepute, whether by act or omission.”

    The new release comes as Canadian regulators tighten their stance against unregulated services.

    The Ontario Securities Commission launched an enforcement action against crypto exchange Poloniex earlier this year, demonstrating regulators’ seriousness. Binance announced later that month that it would no longer serve users in Ontario.

    The OSC barred a pair of regulated services that provide crypto offerings from offering Tether trades in August, indicating that the regulator is closely scrutinizing the stablecoin’s use.

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