Crypto Investment Fund Policy Reforms in Canada


Proposed changes aimed at public investment funds engaging with cryptocurrency were announced by the Canadian Securities Administrators.

On January 18, the Canadian Securities Administrators (CSA) revealed a set of suggested changes targeted at public investment funds that deal with bitcoin assets. This is a big step towards regulating the growing cryptocurrency business. The way mutual funds and other investment vehicles deal with cryptocurrencies is going to be changed by these changes, which aim to make the digital asset field more clear and to improve investor safety.

Funds that may deal directly with crypto assets will be severely limited by the proposed restrictions. Direct cryptocurrency purchases, sales, and holdings are reserved for alternative and non-redeemable investment funds. This change basically prevents regular mutual funds from making direct cryptocurrency transactions; instead, they may only invest in the aforementioned fund categories to have exposure to cryptocurrency.

The regulations regarding the safekeeping of cryptocurrency assets are also tightened by the revisions. Important among them is the need for properly insured assets kept in cold wallets, which are seen as more secure than their online equivalents. A public accountant must also conduct an audit of these custodial arrangements once a year, guaranteeing close examination and supervision.

One other important part of the proposed changes is that crypto assets must be listed on an exchange that is recognized by a securities regulatory organization in Canada. These assets are guaranteed to be fungible, which is essential for trade and appraisal, and this condition gives them credibility.

The Investment Funds and Companion Policy of National Instrument 81-102 will soon undergo these revisions. Canadian provinces and territories have a unified regulatory framework via the adoption of national instruments, which are rules or decrees. By taking this step, the CSA is showing that it is serious about incorporating cryptocurrency assets into Canada’s larger financial regulatory system in a way that protects investors while also encouraging innovation.

There will be a 90-day window for public feedback after the CSA’s announcement. The public and interested parties have the opportunity to voice their opinions on the proposed changes during this time. A consultation document will then be prepared, which will provide the basis for a more comprehensive regulatory framework for crypto assets in Canada. The CSA is demonstrating its commitment to future crypto regulation via this procedure, which emphasizes collaboration and transparency.

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