Cryptocurrency ICOs are subject to a lot of speculation and scrutiny right now. Various governments around the world are looking at ways to regulate this industry. Most of these efforts are not positive whatsoever, especially not in the US and China. Canada, on the other hand, may do things a bit differently. There are still a lot of questions as to how Canadian securities laws apply to ICOs, though. There are some friendly words of advice to be found, which is a positive sign.
It is evident the Canadian government wants to regulate ICOs. However, they have no real intent to do so in a negative manner. More specially, a recently revealed document shows how there is some positive advice for startups and projects. More specifically, raising capital can become subject to Canadian securities laws. However, not all token sales will suffer from this fate whatsoever. It all depends on whether or not businesses reach out to local securities regulatory authorities.
Canada Doesn’t Want to ban ICOs
More specifically, the main objective in Canada is to make ICO projects compliant. This means they will need to do some extra work before raising million in funding, but the efforts can pay off quickly. There is no reason to think Canada will ban ICOs whatsoever. Instead, they take a similar approach compared to the SEC. Some projects pose a bigger risk than others, especially due to their business model. Additionally, some tokens grant more rights or dividends to investors, which means they can be labeled as a securities offering.
“As cryptocurrencies become more popular and mainstream, balancing the demand for new investment opportunities and the need to protect investors from high-risk or fraudulent activities is extremely important. In order to avoid costly regulatory surprises, we encourage businesses with proposed cryptocurrency offerings to contact their local securities regulatory authority to discuss possible approaches to complying with securities laws. We welcome digital innovation and we recognize that new fintech businesses may not fit neatly into the existing securities law framework.”
It is good to see the Canadian Securities Administration keeps an open mind toward ICOs. This goes to show the business model can thrive in the North American country moving forward. These potential guidelines do not just apply to initial coin offerings, though. Anyone setting up a cryptocurrency investment fund needs to be proactive in this regard as well. It will be interesting to see how this situation unfolds moving forward. Thankfully, not every country is taking the same approach as China in this regard.
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