The Canadian Securities Administrators(CSA) and the Investment Industry Regulatory Organization of Canada(IIROC) have jointly published a Communiqué seeking input from the country’s crypto industry players regarding it’s regulation.
These two government agencies are determined to protect investors following the quite recent QuadrigaCX exchange incident that shook market sentiment. An estimated $145 million vanished after the platform’s CEO died while in possession of the network’s private keys. Investigators are still working hard to recover the funds. The published document emphasize that no dealers have yet been authorized to operate in the country and this leaves an ample regulatory vacuum. The agencies emphasize that only a tailored legislative solution can protect Canadian cryptocurrency investors and users from the ups-and-downs of the market.
Internal control and security safeguards have been pinpointed as vital areas that require extensive auditing before a crypto trading business may operate in the country. Many platform operators lucidly lack sufficient knowledge in the technical know-how on how to analyze systems for vulnerabilities and seal every loophole, leaving such networks very exposed to security breaches.
Other standard provisions mentioned in the proposal include having sufficient assets to cover investor claims in case of a bankruptcy or breach.
CRYPTO REGULATIONS IN INDIA, ISRAEL AND MEXICO
A lot of jurisdictions around the world are currently struggling with crypto regulatory matters. Particularly, the Indian government has been involved in a legal tussle with the judiciary and industry supporters for about a year now.
This started after the Reserve Bank of India(RBI), the country’s central bank, issued a directive in April last year barring banks from dealing with any crypto mercantile entities. This order was met with severe resistance and a couple of lawsuits from industry stakeholders. Fortunately, just about a few weeks ago, the Supreme Court of India ruled that the government should come up with a clear regulatory framework designed to correct the mess. The government was given four weeks of ultimatum to provide working guidelines. The court is set to issue it’s own verdict on the matter if the Indian administration fails to do so, and will also stop hearing cases related to the crypto ban. A lot of cryptocurrency companies see the ban to be constitutionally null because no legitimate research-oriented explanations have been given to support the decision.
In a fierce reversal from it’s usual rigid stance, the RBI recently released a statement conceding that the crypto sector poses little threats to the overall financial industry but also warned that it’s negative effects could be increased once there is widespread use of digital currencies.
MEXICO CONSIDERING CRYPTO REGULATION
The Mexican government has also been making preparations to regulate cryptocurrencies according to the latest news reports. Also, just like we have in Canada, the administration through the country’s central bank, Banxico, is seeking suggestions from stakeholders before it begins it’s implementation of the guidelines.
A circular has already been provided by “The Bank of Mexico” and among some of the significant recommendations is a trading license requirement for exchanges and similar businesses. The Mexican cryptocurrency market is somewhat at the dawn of the revolution. It has achieved outstanding growth in the past two years and still continues to show great promise. About half of the country’s population of 130 million lacks bank accounts. Therefore, many of them rely on alternative means, such as crypto and mobile money transfer networks, to make transactions.
CRYPTO REGULATIONS IN ISRAEL
Israel has been lauded as a major technology hub. It is vastly seen as the World’s Startup Nation and is currently home to more than 200 Blockchain Startups. Following the crypto industry popularity and increase, the government is currently seeking ways to regulate the sector. The country has been working hard for a crypto regulatory framework since 2017 through an appointed committee tasked with coming up with a detailed report on the matter.
The committee submitted it’s final research and recommendations about two weeks ago to Anat Guetta, the chairperson of the Israel Securities Authority. And it has been published by the Israel Securities Authority. Also, among the proposed guidelines is the need for disclosure requirements. At the heart of the proposed framework was the need to regulate Initial Coin Offerings(ICOs), this is because they easily dampen or increase investor confidence. The commission again, recommends that Security Token Offerings(STOs) be clearly defined and assigned standardized guidelines. However, following the regulations committee chairman, Dr. Gitit Gur-Gershgoren, the growth of the Israeli crypto sector will primarily depend on the industry’s “attitude towards regulation”, also added that supervision was pointed at contributing to it’s success.
The chairperson of the Israel Bitcoin Association Meni Rosenfield, has also commented on the report, extolling it as a step in the right direction. In this view, greater supervision will address trust concerns and provide value to buyers.
However, it was indicated that the country’s regulatory body still has a lot of work to do in addressing major crypto community concerns, siting the example of the present cryptocurrency and banking sector bifurcation, stressing that it was still a major challenge that is often overlooked.
The country’s financial institutions are greatly bound by the Money Laundering Law, which makes it very hard for Israeli citizens to execute crypto to fiat withdraws via the banking system. A lot of cryptocurrency users rely on platforms like Coinbase to make such transactions, but it’s somewhat impossible to, for example, buy substantial amounts of digital coins using bank deposits. Banks are required to automatically report deposits of over NIS 50,000 ($14,000) to the country’s Ministry of Justice. Clients are also required to indicate the source of the funds. Due to the fact that cryptocurrencies are anonymous by nature, most Israeli banks refuse to get entangled in crypto deals for fear of facing money laundering sanctions.