A row of Canadian financial regulatory authorities has stepped up its efforts in establishing a framework for the cryptocurrency industry while announcing a public consultation round.

The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) initiated a consultation paper in an effort to gather input from market participants on what regulatory requirements can be developed for cryptocurrency platforms.

The CSA is a national standards group covering 57 different areas in Canada. The IIROC is a self-regulatory body overseeing investment dealers and trading platforms.

The purpose of the jointly-organized CSA/IIROC consultation is to seek feedback from the fintech community, market participants, investors, and other stakeholders on how to regulate cryptocurrency platforms.

CSA representative Louis Morisset stated:

This consultation outlines a proposed regulatory framework that provides clarity for platforms, greater market integrity and protection for investors…

The questions the financial regulators want to find answers to revolve around the nature of cryptoassets and cryptocurrency exchanges. The primary motivation is to provide investor protection — as the consultation seems to have been catalyzed by the recent debacle surrounding Canadian cryptocurrency exchange QuadrigaCX.

The main topics addressed in the consultation document are platforms’ custody control, verification of assets in custody, as well as combating trading against its own users.

Canada’s financial regulators have never taken an adversarial stance towards cryptocurrencies. With this initiative, the agencies are demonstrating their willingness to adapt. Instead of enforcing the old framework for securities trading, regulators are looking to take a pro-active approach and integrate digital assets into a customized framework. In doing so, they are considering the preparation of a set of tailored regulatory requirements to address the risks and features of cryptocurrency platforms.

Currently, there are no platforms in Canada recognized as an exchange and none are authorized to operate as a marketplace or dealer. This could change by the end of the year, as the public consultation is open for feedback until May 15.

What do you make of this initiative? Will this move the cryptocurrency industry in the right direction on the regulatory front? Share your opinion in the comments!