The Canadian Securities Administration (CSA) recently put forward guidance on crypto-assets and how dealing with them could make platforms subject to securities regulation. While we agree that being regulated is an important step in the maturity of the crypto-asset industry and Bidali ourselves believes that it is key to gaining trust. To quote our friends at Gemini, "trust is our product". We also believe in that ethos.
However, while regulation is important, ensuring that regulation strikes a good balance between protecting consumers and enabling innovation to occur in Canada is paramount. We believe that without industry guidance and collaboration between industry members, regulators, and government it's impossible to get this balance right. Each party plays a critical role in sharing their experience and knowledge to find this regulatory sweet spot.
This is why Bidali is engaging with Canadian regulators to establish industry standards for online platforms that offer trading in crypto-assets and related financial services. On March 10th, 2020, together with 4 other prominent Canadian-based platforms, we responded to Canadian Securities Administrators’ (CSA) Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets.
The Staff Notice sets out the position of CSA staff that a platform that does not immediately deliver crypto-assets purchased on the platform to its customers is likely dealing in securities or derivatives. In our view, this interpretation represents a significant departure from CSA Staff’s earlier notices on crypto-assets, and the custody of crypto-assets, in and of themselves, does not alone classify a platform as dealing in securities and/or derivatives.
Bidali had expected, based on the CSA’s consultation paper published in March 2019, that platforms would be regulated under a new legislative framework that would accommodate the differences between crypto-assets and securities and derivatives, while still protecting investors. Our industry is in a period of rapid change where international competition is fierce, and if Canada wants to be a leader, Canadian platforms need to work closely with regulators.
While Bidali's Platform does not currently enable our customers, nor any other individuals or businesses to buy, sell, trade, or exchange crypto-assets with any party other than Bidali in exchange for gift cards in a simple commercial transaction, nor does Bidali escrow or hold crypto-assets on behalf of our customers or any other parties, we still believe in advocating for the correctness of regulations because it is paramount to moving the adoption of this technology, that will undoubtedly have a profound economic impact, forward.
As such we wanted to highlight the security protocols for the purpose of protecting our user transactions, assets and data that Bidali has adopted for some time. Please view a description of our security program to see how we work to protect you.
As Timothy Lane, Deputy Governor of the Bank of Canada, recognized in a recent speech:
“innovation, competition and consumer choice are good, and… disruption is not the enemy”
Mr. Lane acknowledged in the same speech that cryptocurrencies require a global effort to “understand the wide-ranging implications and ensure the regulatory framework is fit for purpose”.
For further information, please read our letter. If you are interested in participating in this initiative, please contact our legal counsel and feel free to share this letter.
Eric & The Bidali Team