The Canadian Securities Administrators Association (CSA) has unveiled new rules that prohibit local traders from buying and selling any stablecoins that are not approved by the agency.
The ban will apply to all cryptocurrency exchanges and platforms where digital assets can be traded. However, issuers of stablecoins pegged to the value of other assets (Value Referenced Crypto Assets, VRCA) have the opportunity to circumvent this ban by obtaining permission from the CSA. To do this, companies must comply with the requirements of the regulator, one of which is the provision of fiat currencies and cash equivalents.
The Canadian regulator chose to introduce the term VRCA, as it considers stablecoins not so stable due to their possible decoupling from fiat currencies. So, in May last year, the UST stablecoin completely lost its peg to the US dollar, which led to the collapse of the Terra ecosystem.
The CSA also requires trading platforms to only allow VRCA trading if issuers’ reserves of highly liquid assets are held by a qualified custodian. Reserves must be audited monthly by independent audit firms and their reports published in a timely manner.
In addition, the VRCA allocation must comply with Canadian securities laws, as fiat-backed crypto assets fall under the definition of securities, the CSA said.
Last August, the CSA required digital asset trading platforms to comply with investor protection requirements, even if they are in the process of obtaining a license.