Canadian regulators have announced new requirements for crypto assets and financial platforms in the region.
As part of the new initiative, traders in Canada will be forbidden from purchasing or selling unrecognised algorithmic stablecoins.
For companies to get around the ban they will need to get consent from the Canadian Securities Administrators (CSA) and comply with strict regulations.
Canadian regulators ban algorithmic stablecoins
Although the ban is widespread and will apply to all crypto exchanges and platforms where cryptocurrencies can be bought and sold, there is still a way for algorithmic stablecoins to potentially get through the ban.
Canadian Securities Administrators:
We remind investors that trading in crypto assets comes with elevated levels of risk that may not be suitable for many investors, in particular retail investors. Generally speaking, purchasing crypto assets is a speculative activity and the value and liquidity of crypto assets are highly volatile.
According to the CSA, algorithmic stablecoin companies must ask for permission from regulators if they want their tokens to be avaliable to crypto traders in Canada. To be approved, the stablecoin must adhere to tight restrictions and be backed by fiat currency.
The ban was influenced by recent happenings in the crypto market from the FTX-Alameda collapse to the Celsius scandal.
In light of recent insolvencies involving a number of CTPs, including Voyager Digital, Celsius Network, the FTX group of companies, BlockFi and Genesis Global (collectivelyrecent CTP insolvency events), we are introducing important new investor protection provisions
The ban comes after U.S. regulators crack down on stablecoins and retail staking platforms. Kraken exchange recently shut down its staking services due to pressure from the SEC.