The Canadian Securities Administrators (CSA) has provided guidance to cryptocurrency exchanges and issuers on its interim approach to what it calls value-referenced cryptoassets, with a focus on stablecoins.
On October 5, the umbrella organization of Canada's provincial and territorial securities regulators published a clarification that says it may allow trading in certain cryptocurrencies that reference the value of a single fiat currency, subject to terms and conditions.
In February, the CSA reaffirmed its view that stablecoins "may constitute securities and/or derivatives," the trading of which is prohibited on Canadian cryptocurrency exchanges.
However, if issuers maintain an adequate reserve of assets with a qualified custodian and crypto exchanges offering stablecoins make "certain information related to governance, operations and asset reserve" available to the public, then the CSA could allow those assets to be traded.
CSA Chairman, President and CEO of the Alberta Securities Commission, Stan Magidson, said in a statement:
"This interim framework, which we will develop in the future, sets out certain standards to help ensure that investors receive the information they need about the assets they are purchasing, including the risks associated with them."
The CSA warned that cryptoassets backed by compliant fiat money remain risky and should not be considered backed or risk-free.
Related: Canadian Cryptocurrency Ownership Declines Amid Strict Regulations and Falling Prices
In August, Cointelegraph reported that regulatory clarity in Canada had generated greater interest in cryptocurrencies on the part of institutions.
In July, the CSA issued betting guidanceclaiming that it was allowed, but lending opportunities are limited and the proportion of "illiquid" assets is restricted.
The market capitalization of stablecoins has been declining over the last 18 months or so and currently stands at $123 billion, representing around 11% of the total cryptocurrency market capitalization.
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