Cryptocurrency platforms under watch
TORONTO — The Ontario Securities Commission said Friday it is gathering information on several cryptocurrency trading platforms after it received a number of complaints.
The regulator said cryptocurrency exchanges, where the digital tokens are bought and sold, could fall afoul of securities laws.
“We are aware of several cryptocurrency trading platforms operating in Ontario and are gathering information about their activities. To date, none have been recognized as an exchange, or exempted from recognition,” said Kristen Rose, spokeswoman for the commission, in an email.
Rose explained that platforms that offer this type of trading might classify as a marketplace, and would be required to comply with the rules governing exchanges or alternative trading systems. “If an exchange is doing business in a jurisdiction of Canada, it must apply to that jurisdiction’s securities regulatory authority for recognition or an exemption from recognition.”
The move by the Ontario regulator comes amid the rise of exchanges to trade digital currencies, as well as initial coin offerings to launch new ones. While the original bitcoin cryptocurrency is nearly a decade old, the sharp rise in prices for the new currencies last year created a flurry of interest and startups to serve the new market.
Both the exchanges and initial coin offerings have been operating in a grey area as regulators look to define which securities laws and regulations apply to the new offerings.
The decentralized nature of the currencies, and uncertainty over regulations, have raised worries about possible financial scams.
The U.S. Securities and Exchange Commission has been investigating a number of cryptocurrency exchanges and initial coin offerings and has already cracked down on several.
In February, the SEC charged former exchange BitFunder with fraud for operating unlawfully as an unregistered securities exchange. The regulator said any platform that engages in the activity of a national securities exchange must register, whether the activity involves digital assets, tokens or coins.