The Canadian Securities Administrators (CSA) proposed new rules on January 18th that would restrict how public investment funds can invest in crypto assets.
The amendments would only allow alternative and non-redeemable investment funds to directly buy, sell, or hold crypto. Other mutual funds could only gain crypto exposure by investing in those specialized funds.
The crypto assets would have to trade on a recognized exchange and meet fungibility and insurance requirements. Custodians would need to store assets in cold wallets and undergo annual reviews.
The CSA said the changes aim to “facilitate new product development in the space while also ensuring that appropriate risk mitigation measures are built directly into the investment fund regulatory framework.” The proposals will be open for public comment for 90 days as part of a broader project to develop a crypto regulatory framework that was announced last July.
Canada already has spot bitcoin exchange-traded funds, so the new rules appear focused on expanding regulated crypto investment options.
By providing more regulatory clarity, the CSA hopes to encourage further innovation in the crypto asset sector while protecting investors through custodianship standards and other safeguards. The proposals signal Canada’s openness to crypto while still emphasizing prudent regulation.
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