Canada regulator CSA issues statement on ICOs, ITOs, and Canadian securities law

csa report

Pan-Canadian financial regulator Canadian Securities Administrators (CSA) has published a notice entitled Cryptocurrency Offerings, which outlines how securities law requirements may apply to initial coin offerings (ICOs), initial token offerings (ITOs), cryptocurrency investment funds and the cryptocurrency exchanges trading these products.

The notice describes the factors CSA staff consider in assessing whether prospectus, registration and marketplace requirements apply. It also outlines how the CSA Regulatory Sandbox can help fintech businesses contemplating such offerings and summarizes key issues that businesses should be prepared to discuss with CSA staff.

According to Louis Morisset, CSA Chair and President and CEO of the Autorité des marchés financiers,

The technology behind cryptocurrency offerings has the potential to generate new capital raising opportunities for businesses and we welcome this type of innovation. Given the growing activity in this novel area, we are publishing guidance to help fintech businesses understand what obligations may apply under securities laws.

Any business that is planning to raise capital through an ICO or ITO, or that is seeking to establish a cryptocurrency investment fund, should consider whether it involves a security. Businesses should also contact their local securities regulatory authority to discuss possible approaches to complying with securities laws.

The CSA Regulatory Sandbox is an initiative of the CSA to support fintech businesses seeking to offer innovative products, services and applications in Canada.

The CSA, the council of securities regulators of Canada’s provinces and territories, coordinates and harmonizes regulation for the Canadian capital markets.

The full CSA report on ICO, ITOs, and cryptocurrency offerings can be seen here (pdf).

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