The Canadian Securities Administrators (CSA) released a set of guidelines on Thursday, targeting all advertising and marketing campaigns pursued by crypto trading platforms. According to the press release, the regulator had observed a series of advertising banners and statements that could mislead investors.
Also, the Canadian watchdog noticed a pick-up in such campaigns targeting domestic investors. Additionally, it unveils a pattern of displaying casino-style ads that do not meet the requirements of the CSA because it encourages ‘excessive and risky trading by retail investors.’
“Misleading advertisements and improper marketing strategies may encourage investors to take on risks they would normally avoid, and not respecting the requirements under securities law and IIROC rules may raise concerns about a crypto trading platform’s fitness for registration,” Louis Morisset, the CSA Chair and President and CEO of the Autorité des marchés financiers, commented on the situation.
That said, the regulator updated its members’ website with the guidelines, as well as via the IIROC site, the pan-Canadian self-regulatory organization that oversees all investment dealers and their trading activity in Canada’s debt and equity markets.
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“Crypto trading platforms should consider their advertising and marketing strategies in the context of their obligations to treat clients fairly and honestly. IIROC will continue to work closely with the CSA to ensure investors are protected,” Andrew J. Kriegler, IIROC President and CEO, stated on the matter.
Strengthening Social Media Ads Compliance
Moreover, the CSA said that it would pay closer attention to social media advertising related to cryptocurrencies to make sure it is compliant with the new guidelines. In March, both the CSA and IIROC issued new guidance determining securities law requirements that apply to crypto-asset trading platforms.
The proposed regulatory framework includes mandatory licensing for certain cryptocurrency trading platforms, particularly those that maintain customer funds control. However, non-custodial exchanges appear more likely to benefit from a registration exemption, provided that they do not offer margin or leveraged trading.