Canada: Recent News In Fintech And Virtual Currencies

Last Updated: October 11 2018
Article by Katie Gordon, Russell Allsup and Kelly Samuels

Canadian Securities Regulators Announce Platform to Identify Market Abuse

The Canadian Securities Administrators ("CSA") announced it has selected a market analytics platform designed to identify, assess, and assist potential market abuse cases. Kx, a division of First Derivatives plc, was platform chosen as a result of a public bidding process. Kx is a division of First Derivatives plc, a global technology provider with 20 years of experience working with some of the world's largest finance, technology, retail, pharma, manufacturing and energy institutions.

Although the project will take place in several stages, the agreement is effective immediately. Louis Morrisset, CSA Chair and President and CEO of the Autorité des marchés financiers, expects the insights collected from the platform to "strengthen the [CSA's] data examination capabilities" and enable it to "identify any irregularities that may require further investigation".

Crypto, Currencies, ... Coronation Street?

Popular UK sitcom Coronation Street recently had an unlikely guest – cryptocurrency. The episode featured a storyline in which character Ryan remembers investing £50 in cryptocurrency "Whipcoin", only to realize he has forgotten his password.

New York Federal Judge Rules Securities Law Covers Virtual Currencies

New York Federal Judge Raymond Dearie has ruled that United States securities law can be used to prosecute cases of virtual currencies fraud. In September 2017, Maksim Zaslavskiy was charged by the United States Securities and Exchange Commission for selling unregistered securities for coins and tokens which do not exist. The charges were in direct relation to two different cryptocurrencies: "REcoin", which Zalasvskiy claimed was backed by real estate, and "Diamond", which he claimed was backed by diamonds. Zaslavskiy and REcoin had allegedly misrepresented having raised between $2 million and $4 million from investors, when the actual amount was closer to $300,000.

In March of 2018, Zaslavskiy's legal counsel was unsuccessful in attempts to classify the cryptocurrencies as currencies, rather than securities, and therefore not subject to the Securities Exchange Act. Federal Judge Dearie dismissed the argument, and suggested that securities law should be interpreted "flexibly". Furthermore, Dearie stated that the US securities and exchange commission already considers, and continues to consider, some cryptocurrencies to be securities.

Given the infancy of current virtual currency regulation, it remains unclear on whether other courts will adopt this approach.

Wall Street Places Crosshairs on Virtual Currency Firms

Three separate actions were announced by the Financial Industry Regulatory Authority ("FINRA") and the US Securities and Exchange Commission ("SEC") against several Crypto firms.

The SEC announced that Tokenlot, which is headed by Lenny Jugel and Eli Lewitt, agreed to settle charges against them for $471,000 in disgorgement plus interest. The charges state that the parties were acting as an unregistered broker-dealer for the sale of digital tokens.

The SEC also announced that hedge fund Crypto Asset Management LP has agreed to settle and pay a penalty of $200,000 after they were caught offering a fund they falsely claimed was regulated by the SEC.

Finally, FINRA has accused the president of Rocky Mountain Ayre (RMTN.PK), Timothy Ayre, of committing securities fraud after he sold and marketed the virtual currency, Hempcoin, which Ayre claimed was backed by shares of Rocky Mountain Ayre. Between 2016 and 2017 over 81 million Hempcoins were mined, which were subsequently traded on crypto exchanges. However, Hempcoin was not registered as a security during this time. Based on this conduct, Ayre could potentially face fines or a suspension from the securities industry.

First Canadian Bitcoin Mutual Fund Launched

Blockchain and cryptocurrency investment company First Block Capital Inc. has announced that its bitcoin trust, the FBC Bitcoin Trust, has achieved mutual fund status, enabling unit holders to put units in self-directed registered accounts, such as RRSPs and TFSAs.

The BTC trust enables qualified accredited investors the capacity to gain exposure to BTC without the need to manage, purchase, or store the cryptocurrency. The fund is currently available to accredited investors on NEO Connect, under the ticket FBCBT.

Canada Delays Virtual Currency Regulations

The Canadian government has opted to delay the release of its final regulations for cryptocurrency and blockchain companies. The regulations (under Canada's Proceeds of Crime (Money Laundering) and Terrorist Financing Act) were due for publication in the Gazette in the fall of 2018, but have been pushed back until late 2019 or into 2020.

Some groups spoke positively about the delay. The Blockchain Association of Canada (BAC) suggested the decision to delay was appropriate, given the distinct and often complex world of virtual currency:

"The decision to delay the proposed regulations bodes well for the Canadian blockchain and cryptocurrency space. The government is committed to an innovation agenda and sometimes ... it may be best to observe and intervene as little as possible" said BAC Executive Director Kyle Kemper.

The government published a draft of the virtual currency regulation in June of 2018, which placed certain rules and guidelines on the industry as a whole. The regulations received extensive feedback from blockchain organizations across Canada.

Toronto-based Blockchain Research Institute (BRI) called for a "middle ground" when it comes to regulations while admitting that the placing guidelines down would aid the development of the industry. BRI gathered input from 70 other participants who agreed that excessive regulation could inadvertently halt innovation within the industry.

Ontario Securities Commission Announces Participation in Global Innovation Initiative

The Ontario Securities Commission has announced its participation in the Global Finance Innovation Network ("GFIN"), a collaboration of over 11 financial regulators from across the globe to assist firms in navigating the complex regulatory schemes found when operating across multiple jurisdictions.

The collaboration aims to enhance information-sharing between financial service regulators and will build on the OSC's current connections built through LaunchPad, the first team dedicated to providing direct support to fintech businesses by helping them navigate regulatory requirements. Pat Chaukos, Deputy Director of OSC's LaunchPad, says the collaboration "...furthers our commitment to enhancing the regulatory experience for emerging businesses that offer novel products and services to investors."

Recent News In Fintech And Virtual Currencies

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions