San Francisco-based cryptocurrency exchange Kraken has filed a pre-registration undertaking with a Canadian provincial regulator as it works towards becoming a regulated provider in the country.
To continue operating while their application is being processed, cryptocurrency platforms must give their primary regulator a pre-registration undertaking. By making these commitments, Kraken acknowledges that its platform is bound by terms and conditions that address investor protection issues.
If a cryptocurrency trading platform is unable to file an undertaking or does not adhere to its requirements, CSA members may seek legal action.
Kraken Prioritizes Compliance
Kraken, which recently settled with US regulators for listing digital assets that should be registered as securities, filed the undertaking with the Ontario Securities Commission to qualify as a registered Restricted Dealer across Canada.
“Canada as a geography is critical to our mission to empower people with new ways to connect and transact. Trading platforms that prioritize compliance and secure trading experiences will have more success advocating for crypto‘s economic benefits and transformative potential for crypto traders and investors,” said David Ripley, Kraken’s Chief Operating Officer and incoming CEO.
“As we forge this new regulatory path, we‘ll continue engaging with our local regulators to enhance our understanding of crypto’s economic benefits and transformative potential. We believe in offering clients a compliant trading platform that leverages our robust security protocols, unrivaled 24/7, live customer services support, industry-leading liquidity, and a superior product offering,” added Mark Greenberg, Managing Director for Canada at Kraken.
New Rules Tighten Oversight of Cryptocurrency Exchanges in Canada
The recent move comes as Canadas financial regulator is rolling out a coordinated oversight regime for cryptocurrency activities. Now, all crypto trading platforms seeking registration are obliged to sign undertakings to comply with investor protections.
The Canadian Securities Administrators (CSA) plans to strengthen its oversight of cryptocurrency exchanges operating in the country. As part of a basket of new registration requirements, crypto applicants will have to agree to tighter rules, including a ban on margin and leverage trading.
Additionally, the proposal prevents crypto providers from accepting payments via credit cards and requires them to keep customer assets segregated from their own operational funds.
These measures also include suggestions that providers should be forced to hold all Canadian clients‘ assets with an appropriate custodian and segregate these assets from the platform’s proprietary business.
Impact on Retail Investors
The new rules will make it more difficult for retail investors to trade cryptocurrencies using leveraged bets. These bets have been attractive to many retail investors, but they also pose a significant risk of loss.
The CSAs aim is to protect investors by reducing the risks associated with cryptocurrency trading. As such, it is introducing a range of measures to ensure that exchanges prioritize investor protection.
OKX Quits Canada as Kraken Files for Registration
Kraken's registration happens just a week after OKX notified its Canadian consumers that it would shut down and stop taking on new clients. The industry's titan appears to have chosen to leave Canada rather than follow stock regulations or come under regulatory inspection.
OKX described its decision to quit Canada as “temporary” and that it‘s working with the nation’s regulators to solve the issue.
Conclusion
Kraken has shown its dedication to safety and investment security by choosing to submit a pre-registration plan with the Canadian Securities Administrators. It will be more challenging for markets to run without abiding by stringent laws thanks to the new rules being implemented in Canada.
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