CSA Releases 2022 ‘Investor Education Report’ Highlighting Crypto Initiatives by Canadian Regulators

While current asset prices may not show it, interest in digital assets continues to rise.  As such, various Canadian regulators have been working to educate the masses on cryptocurrencies, and the companies which offer them.  The most recent example of this comes from the Canadian Securities Administrators (CSA), and the release of its 2022 report titled ‘Investor Education in Canada'.

Source: Twitter @OSC_News

Due to the rather fragmented nature of regulation across the provinces and territories, instead of attempting to share generalities it opted to highlight initiatives being taken by various provincial regulators.

Ontario Securities Commission (OSC)

Touting a, “…262% increase in crypto complaints in 2022 compared to 2021”, the OSC felt it due time to create a dedicate resource to helping Ontarians clear up any confusion surrounding digital assets.  This resource, GetSmarterAboutCrypto.ca, was built to educate investors on the following,

• How crypto assets work
• The OSC's role in regulating them
• Where to check if a crypto trading platform is registered

In addition to this, testimonials highlighting various fraud tactics are shared to bring awareness to this continuing issue.

Nova Scotia Securities Commission (NSSC)

Meanwhile in Nova Scotia, the NSSC followed a similar path as the OSC in releasing its own list of registered crypto asset trading platforms, in an attempt to cut down on fraud.  A few of the key names found on this list include companies like Bitbuy, Coinsquare, WealthSimple, and more.

In addition to providing this list, the NSSC began creating short videos highlighting some key facts surrounding unregistered platforms preying on Nova Scotians.

Alberta Securities Commission (ASC)

Located 5,000km west of Nova Scotia, the province of Alberta also saw its main regulator, the ASC, take similar steps over the past year.  In the release of its own ‘Investor's guide: Cryptocurrencies' the ASC goes beyond answering ‘What are crypto assets', educating readers on methods of custody (hot vs. cold wallets), registered platforms, and more.

Add it all up, and the ASC offers the following tips for dealing with digital assets in a safe manner.

• Check the registration of the crypto asset trading platform before investing
• Avoid social media and online groups that promote experts who can help you invest in crypto assets
• Ignore investment opportunities offered through social media and dating apps
• Look out for guarantees of high returns with little to no risk of loss
• Be wary of crypto asset recovery offers
• Refuse remote access to your computer
• Avoid unusual forms of payment or transfers
• Don't invest in anything you can't understand

Like its counterpart in Ontario, the ASC has taken the time to clarify that even if an asset is not a security, securities laws still apply to them in many instances.  More specifically, “If a crypto asset is not a security or derivative, Alberta securities law will still apply to platforms that provide a trading venue and hold custody of the crypto assets for Alberta clients. If the platform does not hold custody of crypto assets for clients or facilitate the trade of crypto assets that are securities or derivatives, securities law may not apply.”

In Other News

Beyond the aforementioned research report, there have been various other developments as of late involving Canadian regulators.  The following are a couple examples of these.

OSC Chair Resigns

Recently, the resignation of OSC Chair Heather Zordel was announced.  Citing ‘personal reasons and workload', the departure of Zordel marks one of the shortest tenures of past Chairs, coming in at only 7 months – barely 1/4 of the way through her two year term.

OSC Crypto Asset Survey

In order to effectively educate the masses on cryptocurrencies, regulators must first gauge existing sentiment, education, and awareness surrounding such assets.  The OSC has recognized this, and recently shared the results of its latest ‘Crypto Asset Survey‘.  The following are a few key highlights from its findings generated through the polling of 2360 Canadians.

While 13% of Canadians were found to already own crypto assets or crypto funds, 87% of those individuals were already investors.  These same individuals were found to boasts higher levels of financial literacy than average.

Of those individuals that have yet to take the plunge and participate in the sector, the following reasons topped the list for why not.

• ‘feels like gambling'
• cybersecurity concerns
• volatile value

It should be noted that while these may have been the top concerns among those that do not own digital assets, this same group is said to have had a, “…more limited knowledge and understanding of crypto assets.”

Interestingly, it seems that despite the increase in interest being shown to digital assets by institutional investors and investment firms over the past few years, Canadian financial advisors seem unwilling to recommend them.  The survey revealed that among those that already own digital assets, only 40% had a discussion about them with their financial advisor.  Of the 40% that had the discussion, 15% were recommended specifically to not buy them.

Between hesitancy among financial advisors to promote digital assets, and a limited experience among Canadians in owning them, it was made blatantly clear by this survey that mainstream adoption has yet to occur.  While this may mean that we are still years away from digital assets truly being commonplace, it is encouraging to know that the market is no where near approaching its potential in both reach, and financial opportunity.