Canada is nothing less than a volatile environment for the Cryptocurrency industry. After the recent speculation over the Crypto regulation in the country, its securities administrators, in collaboration with the Investment Industry Regulatory Organization of Canada, proposed a regulatory framework demanding that short selling and margin trading of digital assets be slowed down.
The duo is now seeking a community reaction on their proposal named ‘Proposed Framework for Crypto-asset trading Platform’, It was framed on March 14, 2019. Cryptocurrency traders worry that if the regulation approved, it will create a massive turmoil in the industry because of the stripping of two of the most commonly-used trading instruments-margin trading and short selling. In fact, eliminating these two options will leave traders to deal with only spot trading.
The regulation is in lieu of Japan’s newly-framed regulation that limits the amount of leverage, cryptocurrency exchanges may offer their users. However, it must be noted here that it has not stripped its traders off the assets. It needs to be mentioned here that the amended rulebook by Japan will be effective from April 2020, but the crypto custodians have been summoned to register or re-register themselves so that the legislators could cut down on the ponzi schemes and illegal cryptocurrency companies.
QuadrigaCX had everything to do with it
Interestingly, the recent scandal surrounding Canada’s largest cryptocurrency company and the death of its CEO has led to such a decision by the lawmakers. They are now skeptical about the safety of public investment and how the companies are going to manage them. It, thus, goes without saying that the proposed regulations aim at providing a safe transaction to investors by placing custody providers under traditional legislative norms.
The proposal thus read:
“To reduce the risks of potentially manipulative or deceptive activities, in the near term, we propose that Platforms not permit dark trading or short selling activities, or extend margin to their participants.”
It further said that cryptocurrency custodians will have to adhere to the standards set by the lawmakers that are highlighted in the proposal. They also have to adhere to the regulations that have not yet been set by the legislators.
Just like in Japan, the legislators probably wish to control the activities of the Cryptocurrency agencies and how they protect their customers’ assets. This way, the activity of the unaccounted companies will directly come under the spotlight, helping the government tighten the noose around their neck.