In a recent article published by Stikeman Elliott LLP, concerning virtual currency regulation, it is revealed that Canada does not currently have a comprehensive framework governing the regulation of digital assets. This fact puts Canada somewhat behind many other jurisdictions in their dealings with the burgeoning world of digital assets.
The legal spotlight on digital assets in Canada focuses primarily on securities and derivatives regulation, which has become the main regulatory instrument. A further feature of Canadian regulation, and perhaps a complicating factor for consistency, is the division of legislative jurisdiction in the area of derivatives between the federal and provincial governments.
While the securities regulatory framework is largely streamlined and harmonised across Canada, legislative jurisdiction in the area of derivatives is more complex. Both federal and provincial governments hold sway in their respective domains and this can lead to fragmented regulatory guidelines for the burgeoning field of digital currencies.
This article points to the important gap in the Canadian regulatory environment regarding digital assets. Indeed, it raises significant questions about the extent to which Canada is prepared for dealing with the increasing prominence of cryptocurrencies and other digital assets in the global financial market.
Given the international momentum towards more robust regulation of digital assets, and the involvement of major global financial institutions in these markets, Canada’s current situation reveals a pressing need for policy makers to address these evolving challenges. It remains to be seen how and when these necessary changes will come about.