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| Heidi J. T. Exner |
In Canada’s rapidly expanding cryptocurrency market, regulators are striving to proactively protect investors and uphold market integrity in the digital asset space. With provincial and territorial securities bodies collaborating under the Canadian Securities Administrators (CSA) and the new Canadian Investment Regulatory Organization (CIRO) acting as the self-regulatory authority, the Canadian regulatory framework for crypto asset trading platforms continues to evolve.
In August 2024, the CSA ordered crypto trading platforms to register under CIRO. This followed a rather generous period from March 2021, during which the CSA, along with CIRO-predecessor IIROC, issued “guidance” to crypto platforms in CSA Staff Notice 21-329. This guidance indicated that these firms could continue to operate as restricted dealers (registered directly with the CSA) while working toward SRO membership.
In January 2025, only a small handful of them are “authorized to do business with Canadians.” The first to become authorized was Coinsquare Capital Markets (admitted to IIROC in October 2022). The first international platform to take this step was Coinbase, which achieved “restricted” status (full status pending) nine months ago, in April 2024. According to Coinweb, there are 1,492 cryptocurrency exchanges worldwide.
Why is it significant that so few of these actors have taken steps to do business in Canada? As Canada offers vast rural land and relatively inexpensive power for mining, numerous technology innovators, and a particularly enthusiastic cryptocurrency trading community, one might wonder why so few digital asset platforms have taken steps to do business in the “True North Strong and Free.” The answer is too complex for a single article to cover, but a good starting point for this conversation appears to be red tape.
At its core, Canada’s securities regulations are governed at the provincial and territorial levels, rather than by a single federal agency. Despite this fragmented structure, regulators must collaborate to harmonize rules and enforcement. As the digital asset space has experienced exponential growth over the last several years, the CSA has dedicated significant resources to developing guidelines specific to crypto asset trading platforms. Several Staff Notices released by the CSA and CIRO guide these platforms as they navigate evolving requirements.
These guidelines, which appear in various Staff Notices, cover compliance requirements related to the custody of crypto assets, product offerings, and investor protection measures. Notably, some tokens are deemed securities or derivatives under Canadian law, requiring platforms dealing with them to register or secure an exemption. By releasing periodic notices, the CSA seeks to clarify registration procedures and highlight risks posed by unregistered platforms.
A critical element of the CSA’s approach is the pre-registration undertaking. Platforms that want to operate while awaiting final registration must sign an undertaking committing them to a series of investor-protection measures, such as restricting certain high-risk product offerings and adhering to strict custody rules. This process helps Canadian regulators mitigate risks posed by new market entrants while ensuring platforms move toward full regulatory compliance.
CIRO is nationally recognized by the CSA and is charged with setting and enforcing nationwide dealer member standards. Traditionally, its oversight extended to investment dealers (under IIROC) and mutual fund dealers (under the MFDA). Specific crypto platforms that register under an investment dealer category (or restricted dealer category, in certain circumstances) also come under CIRO’s jurisdiction. By consolidating IIROC and MFDA into one entity in 2023, CIRO aims to streamline oversight processes, eliminate duplicative requirements, and create a more uniform regulatory environment for dealers – including those dealing in crypto assets.
But has this new singular body reduced some of the red tape?
Before a crypto asset trading platform applies to CIRO, it must establish whether its crypto assets fall under the definitions of securities or derivatives and whether the platform’s operational model classifies it as a marketplace, investment dealer, or restricted dealer. Most crypto asset trading platforms in Canada end up registering as either investment dealers, which are typically subject to full CIRO membership and more comprehensive obligations, or restricted dealers, which is a classification used where the scope of the platform’s activities is narrower or product lines are more specialized, requiring a different set of obligations.
A platform that intends to operate in Canada submits a registration application to the securities commission in the province or territory where it seeks to do business. While the registration is under review, the platform may be asked to sign a pre-registration undertaking, which imposes specific conditions to safeguard investors pending formal approval.
Once the regulators have the platform’s submission, they assess its business model, financial statements, AML policies, corporate governance, and technology infrastructure. This review can be extensive, and it often involves multiple, time-consuming rounds of questions and document requests. When satisfied, the regulator grants provisional clearance or a final registration decision.
If the platform applies as an investment dealer, the next step is to become a CIRO dealer member. This process involves additional due diligence by CIRO, an assessment of the platform’s internal controls, and potential adjustments to align with CIRO’s rules. After final membership approval, the platform is subject to ongoing regulatory audits, capital reporting, and business-conduct reviews.
All crypto platforms in Canada must also adhere to federal anti-money laundering laws under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), enforced by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). Compliance entails registering as a money services business (if applicable), implementing a robust AML program and risk assessment framework, conducting ongoing KYC measures and enhanced due diligence where warranted, and filing mandatory reports (e.g.: large cash transaction reports, suspicious transaction reports).
This dual oversight by securities regulators and FINTRAC reflects Canada’s emphasis on preventing illicit financial activity while ensuring market integrity. Canada’s regulatory environment for crypto asset trading platforms is marked by a combination of provincial-level authority, CSA coordination, and CIRO’s self-regulatory role. Platforms looking to operate in this space must navigate a thorough registration process, sign pre-registration undertakings when required, and adhere to stringent AML obligations through FINTRAC.
While this multi-layered system may present a complex entry point for newcomers, the narrative maintains that its robust investor protection measures and clarity around compliance expectations also help foster a stable environment for legitimate crypto businesses to thrive. As the Canadian crypto space evolves, ongoing discussions among regulators, industry participants, and advocacy groups will shape how CIRO and the CSA refine their frameworks. I am of the mind that we are at a critical juncture in this space, and if Canada is serious about embracing this new frontier and the opportunities it brings, the voices of industry actors must be heard.
Perhaps it is too soon to tell whether Canada’s efforts can achieve innovation and security in Canada’s burgeoning crypto ecosystem.
Heidi J. T. Exner is an award-winning white-collar crime fighter. She is the founding partner of Ethical Edge PI & Corporate Advisors, the founder and chair of the Exner Foundation, and she serves on the Policy & Advocacy Committee at the Canadian Blockchain Consortium. She welcomes you to find her on LinkedIn or check out her biography page on Ethical Edge’s website.
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