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Gate.io Blog Canadian Regulators Urge Investment Funds to Trade Exchange listed cryptos

Canadian Regulators Urge Investment Funds to Trade Exchange listed cryptos

31 January 11:27

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## [TL; DR]
Canada has proposed a new set of crypto laws to govern the acquisition and sale of crypto assets.

Only Mutual and non-redeemable funds are allowed to invest in public crypto asset funds.

Crypto investors and users can buy cryptocurrencies on exchanges and brokers.

## Introduction
There are several signs that indicate that many countries are slowly embracing cryptocurrencies as essential investments assets. For example, the recent approval of spot <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> ETFs in the United States indicates how regulators and national economies are incorporating digital assets into their economic systems.

Today, we discuss how Canada, one of the crypto-friendliest countries in the world, intends to introduce a set of rules to protect investors, crypto businesses and the entire economy. We shall also concentrate on how people can buy crypto assets in Canada.

## Canadian Regulators Strengthen Oversight on Crypto Investments
The Canadian Securities Administrators (CSA) has come up with a new set of crypto investments rules, aimed at protecting investors and fostering innovation and growth in the blockchain sector. The gist of the crypto regulation is to govern the use of public funds in the crypto industry.

The new legislation will allow only alternative and non-redeemable investments, also referred to as specialized funds, to directly invest in crypto. As such, they can buy, hold and sell various crypto assets the CSA considers suitable for that purpose.

What this means is that all the other mutual funds can invest in crypto through these specialized funds. Further, the crypto in Canada regulatory body (CSA) has proposed to amend its definition of alternative mutual fund to include mutual funds that invest in crypto assets.

The CSA also intends to clarify on the digital assets such as cryptocurrencies the funds can invest in. As such, they are not going to invest in any crypto asset that is on the market since some of them do not have track records and substantial liquidity.

Instead, investment funds should invest in cryptocurrencies that are readily accessible to the general public such as those that are available on any major Canadian crypto exchange.

The [CSA clarified](https://www.osc.ca/sites/default/files/2024-01/csa_20240118_81-102_rfc_crypto-assets.pdf "CSA clarified"), “We are proposing to restrict investment funds subject to NI 81-102 to investing only in crypto assets that are listed for trading on, or are the underlying interest for a specified derivative where that specified derivative trades on, an exchange that has been recognized by a securities regulatory authority in Canada.”

Also, such crypto assets should meet other conditions which include fungibility and insurance requirements. Thus, the mutual funds and alternative funds will not be allowed to invest in non-fungible assets. In addition, the custodians of these digital assets should store them in cold wallets.

The CSA clearly stated the purpose of the piece of crypto regulation. [It said](https://www.osc.ca/sites/default/files/2024-01/csa_20240118_81-102_rfc_crypto-assets.pdf "It said"), “The Project’s objective is to review existing requirements, provide guidance, and then implement a regulatory framework relating to Public Crypto Asset Funds that ensures adequate investor protection and mitigates potential risks while providing greater regulatory clarity for product development and management.”

It added, “The Project is a recognition by the CSA that the existing regulatory framework in NI 81-102 needs to be adapted to properly account for the unique aspects of crypto assets as an investment product for publicly distributed investment funds.”

As per the CSA, the law prohibits the funds from using crypto assets in “securities lending, repurchase transactions or reverse transactions, as the loaned securities, transferred securities or collateral.”

The mutual funds which are not alternative and non-redeemable investments should not invest in related derivatives as well. That said, the public is welcome to give their feedback to the proposed crypto regulation before 17 April this year.

## Pitfalls of High Expectations for Pre-exchange Crypto Tokens 
As per the proposed crypto investments rules in Canada the mutual funds and non-redeemable funds will not invest in pre-exchange crypto tokens since they expose the investors to several risks. Often, the pre-exchange crypto tokens are sold to early investors and backers through presales. In some cases, institutional investors purchase these crypto assets in large amounts.

One of the risks of the pre-exchange crypto tokens is lack of liquidity, even at the time they are later listed on exchanges. In such a case, it might be difficult for the investors to convert the tokens to cash at the time they may need to do so in the future.

In addition, it may become difficult in the future to ascertain the valuation of the pre-exchange crypto assets due to the unavailability of required information. In a normal case, the valuation of an investment asset is based on the project’s roadmap, expected earnings and available financial statements.

There is also a possibility of market manipulation by certain investors, especially large firms. Such investors can purchase the low-market-capitalized crypto assets in large quantities. Soon after the tokens are listed such crypto whales may dump them on the market resulting in prolonged periods of low prices.

## How and Where to Buy Cryptocurrency in Canada
Canadian citizens can buy cryptocurrencies on crypto exchanges and brokers. Some popular exchanges in the country are Crypto.com, Gate.io, Kraken, Coinbase, Binance, <a href="/price/kucoin-kcs" target="_blank" class="blog_inner_link">KuCoin</a>, Bitbuy, Wealthsimple, NDAX, VirgoCX, Coinsmart and Coinberry.

The residents can also purchase digital assets at Bitvo Inc., Coinsquare, ASC Clearing relief, Fidelity Clearing Canada ULC, Hibit Technology Ltd., Netcoins Inc., and Shakepay Inc.

### Buying Cryptocurrency at Exchanges
Most local cryptocurrency exchanges in Canada allow crypto investors to buy cryptocurrencies using the Canadian dollar, although they charge administrative fees for that.

The first thing to do to purchase cryptocurrencies on exchanges is to open and verify your account. After doing that, you can <a href="/price/link-ln" target="_blank" class="blog_inner_link">LINK</a> your bank account to an exchange which enables you to pay for the crypto assets using the Canadian dollar (CAD).

### Buying Cryptocurrency using a Broker
The process of purchasing cryptocurrency using a broker is similar to what you do with a crypto exchange. First, you open and verify your account. The brokers require you to use an email address, phone number and other required personal details.

After that you fund your account using either a credit/debit card, PayPal, Crypto card, gift card or wire transfer. However, the brokers deduct administrative or trading fees when you fund your account. Once there is funds in your account you can place an order for a cryptocurrency of your choice.

### Crypto ATMs
Many Canadian banks have installed Bitcoin ATMs on their facilities. These ATMs create bank crypto exposures, making it convenient for investors to buy or sell cryptocurrencies. This is another easy way in which crypto investors <a href="/how-to-buy/bitcoin-btc" target="_blank" class="blog_inner_link">buy Bitcoin</a> and other crypto assets.

## Conclusion 
The Canadian regulators have proposed a new set of crypto investment rules to protect investors. The legislation restricts the mutual funds that can invest in crypto assets. Also, the law only allows the funds to invest in exchange listed crypto assets which are accessible to many interested residents. In the meantime, people can buy cryptocurrencies on exchanges or brokers.

## FAQs about Crypto Regulations in Canada
### Who regulates crypto Canada?
The Canadian Securities Administrators (CSA) regulates cryptocurrencies in Canada. It is responsible for establishing crypto regulations and enforcing them.  Recently, it proposed a new set of crypto laws to govern the acquisition and sale of crypto assets.
### Is Gate.io regulated in Canada?
Canada allows Gate.io to operate in the country since it offers its services to its citizens. However, Gate.io should follow government stipulations on how exchanges should operate in the country such as anti-money laundering provisions.
### What is the SEC equivalent in Canada?
The Canadian Securities Administrators (CSA) is the equivalent of the United States SEC. It establishes and enforces crypto regulations in the country.
### Who is the regulator of the Canadian market?
The Canadian Securities Administrators (CSA is the regulatory authority in Canada responsible for creating and enforcing regulations on digital assets and related investment vehicles. Therefore, crypto firms and investors should abide by its legal guidelines and provisions.
### Who accepts cryptocurrency in Canada?
Canada allows its residents to acquire, hold and trade cryptocurrencies on licensed crypto exchanges and brokers. Therefore, businesses and individuals can accept and make payments using crypto assets.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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TL；DR

Introduction

Canadian Regulators Strengthen Oversight on Crypto Investments

Pitfalls of High Expectations for Pre-exchange Crypto Tokens

How and Where to Buy Cryptocurrency in Canada

Conclusion

FAQs about Crypto Regulations in Canada

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