Ontario Securities Commission Chief Executive Officer (CEO) Grant Vongoe said that according to a report planned for release by the regulator in October, a decent percentage of Canadians were planning to purchase Bitcoin and crypto shortly.
Cryptocurrencies Should Not Be Regulated Differently
In a keynote address made at the Economic Club of Canada on October 6, Vingoe emphasized OSC’s neutral stance on technology, saying the regulator had received significant attention regarding the “regulation of digital assets and their intermediaries.”
According to the OSC chief, the agency does not want to become the center of attention in what he termed a “hotly debated topic in the public discourse” however, “if our actions draw public attention to the risks and opportunities of the crypto sector, the attention serves an important purpose.”
He, however, regretted that the public discussions about crypto regulation have been laden with misinformation, be it “intentional and unintentional,” which confuses investors. Vingoe asserted that the cryptocurrency industry should not have different regulatory treatment from other similar entities.
According to the OSC head, regulatory fundamentals of equities and bonds were equally applicable to digital asset contracts, adding that the “vast majority of crypto-based entities” fall within the OSC’s jurisdiction. The regulator considers Bitcoin and Ethereum (ETH) commodities, while he said the “arrangements that trading platforms have with investors” constituted securities.
“The fundamentals of regulation are equally applicable to stocks, bonds, and crypto contracts. They include disclosure, conduct regulation for intermediaries, reasonable investment limits to avoid the worst risk of loss to retail investors (from concentration or outsized investments), prudential regulation of intermediaries and investment infrastructure, regulatory scrutiny and examinations, proficiency and ethics, enforcement, and redress. There is no reason why crypto assets and their intermediaries should be free from these critical regulation elements.”
He added that the growing crypto market is becoming interconnected to the financial system, potentially posing a concern, citing the recent crash that has wiped out nearly 70% of the market since its November peak above $3 trillion.
“We know from our research, which will be published later this month, that more than 30 percent of Canadians plan to buy crypto assets in the next year.”
Despite Vingoe’s warning over the highly volatile and risky nature of cryptocurrencies, he acknowledged that blockchain technology upon which cryptocurrencies are based has “great potential” for “businesses, institutions, and governments that would benefit from transaction records that cannot be altered.”
The OSC said that the technology offers opportunities to modernize the Canadian capital markets with the “possibility of dramatically lower transaction costs and improved efficiency” and conceivably encrust regulations through smart contracts.
The Cryptocurrency Industry Should Increase Self-regulation
As crypto adoption increases worldwide, the OSC appears concerned about the unregulated state of the crypto industry. The regulator chief said the crypto industry should do better at policing itself instead of waiting to be supervised by regulators.
Vingoe pointed out that legislative oversight of domestic and foreign cryptocurrency firms was necessary for Canadian capital markets. And while the Canada-based regulator has tried to regulate the industry, “we are stretched quite thin with it … [due to]… limited budget and finite enforcement staff.”
It should be noted that the OSC has taken enforcement actions against crypto exchanges, such as KuCoin and Bybit, on allegations that they have violated securities laws and operating unregistered crypto asset exchange platforms in the country. Nine crypto firms were listed as registered digital asset companies under OSC as of August 15, including Newton Crypto, BitBuy, and Fidelity Digital Assets.