CSA publishes proposed amendments to public crypto asset fund rules
Jan 19, 2024
On January 19, 2023, the Canadian Securities Administrators (CSA) published Notice and Request for Comment on Proposed Amendments to National Instrument 81-102 Investment Funds Pertaining to Crypto Assets. The Notice sets out a series of proposed amendments and changes to reporting issuer investment funds that seek to invest directly or indirectly in crypto assets (public crypto asset funds).
The primary objectives of the proposals are to provide greater regulatory clarity on permitted crypto asset investment activities, to prohibit the use of crypto assets in securities lending and (reverse) repurchase transactions and to confirm custodial expectations.
The most significant updates to the existing public crypto asset fund practices include:
- explicit limitations on Non-Fungible Tokens ;
- mandates for investing solely in crypto assets (or derivatives with crypto asset underliers) that are traded on recognized exchanges while continuing to allow purchases on crypto asset trading platforms;
- requiring crypto custodians to obtain, and deliver to public crypto asset funds, SOC 2 Type 2-like reports
The Notice represents the second phase of the CSA’s ongoing effort to establish a comprehensive regulatory framework for public crypto asset funds in Canada. Following their initial guidance document (CSA Staff Notice 81-336 Guidance on Crypto Asset Investment Funds), these amendments aim to further clarify existing securities regulations and refine expectations for how such funds operate under National Instrument 81-102 Investment Funds.
Access the notice on Ontario Securities Commission’s website.
