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What is blockchain technology in banking
September 12, 4: The legal status of offerings of bitcoin and other cryptocurrencies in Canada has gotten a little clearer. The CSA notice, published last month everywhere except Saskatchewan, goes further.
It adds guidance on how regulators will determine if an offering crosses into the realm of securities law. It also adds some examples: In short, you can expect Canadian regulators to have jurisdiction over cryptocurrency offerings in a lot of cases. Back in the s, the Supreme Court of Canada dealt with what constitutes an investment contract in a case called Pacific Coast Coin Exchange v.
Pacific advertised in newspapers that it was selling bags of silver coins. Buyers sent in their orders by mail. This gave Pacific a pool of money to finance its operations. Delivery of the silver coins was not to take place until buyers paid the full purchase price. Instead, they tended to wait for a while, then close out their margin accounts. After paying commissions and interest, customers received or were paid the difference between their purchase price and the market price at closing.
The Supreme Court of Canada found that Pacific was indeed selling investment contracts, and therefore subject to Ontario securities law. The court did so by adopting a four-prong test set out in U. The CSA notice takes that decades-old legal test and teleports it into the 21st century world of cryptocurrency.
And here it is. ICO and ITO offerings are investment contracts if they involve 1 an investment of money 2 in a common enterprise 3 with the expectation of profit 4 to come significantly from the efforts of others. The CSA note says Canadian securities laws will apply if the sale involves business conducted within Canada or if there are Canadian investors. This suggests a broad reach, note lawyers Rawle and Rizvi.
If an ICO or ITO falls within the scope of securities law, the promoters of the coin or token will need either to file a prospectus with regulators, or have an exemption from the prospectus requirement.
The exchanges raise several questions, such as whether provincial securities regulators recognize them as marketplaces. Cryptocurrency investment funds, meanwhile, need to determine whether they is subject to Canadian securities laws, and if they are, ensure that its portfolio holdings comply with the appropriate laws.
Financial Post dhasselback nationalpost. Filed under Legal Post. Canadian NHL teams don't often win the Stanley Cup now, but their rabid fan base still makes them big winners. Even a modest increase in interest rates in Toronto and Vancouver is a concern for most buyers.
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