Financial Innovation in the Capital Markets

The ASC works with market participants who are engaged in using technology in new ways to understand how securities laws may apply to their ideas and proposed innovation.

CSA Regulatory Sandbox

ASC staff engage collaboratively through the Canadian Securities Administrators' (CSA) Regulatory Sandbox Committee – a cooperative initiative supporting financial technology (fintech) businesses looking to offer innovative products, services and applications in Canada.

For further information, please contact Denise Weeres, Director, New Economy.

International Affiliations

In addition to participating on the CSA Regulatory Sandbox committee, ASC staff participate with various national and international regulators in formal and informal collaboration respecting fintech. Formal fintech networks include:

Do Alberta securities laws apply to crypto-assets?

Crypto-assets, commonly referred to as cryptocurrency, have captured significant attention. Crypto-assets are digitally represented assets that typically rely on cryptography and blockchain or distributed ledger technology. They are generally referred to as coins or tokens. Some of the more common crypto-assets include Bitcoin, Litecoin and Ethereum.

Alberta securities law will apply to the trading of a crypto-asset if the crypto-asset is a security or a derivative, or if a crypto-asset is the asset underlying a derivative, or one of the assets in an investment pool in which interests are being offered to investors. Some crypto-assets that are used only as a form of payment or store of value and have not been issued as part of a capital raising effort, and have decentralized operations, may not be securities. However, some crypto-assets are.

CSA Staff Notice 46-307 Cryptocurrency Offerings provides guidance as to how securities law applies to crypto-assets. CSA Staff Notice 46-308 Securities Law Implications for Offerings of Tokens provides additional guidance respecting when a crypto-asset offered in an initial token offering or initial coin offering will be considered a security. Although they may be labelled ‘utility tokens’ the offering of tokens under an initial coin offering or an initial token offering has generally appeared to constitute a sale of securities.

If a crypo-asset is a security, it can be sold either with a prospectus or relying on one of the available prospectus exemptions or discretionary exemptive relief. Although securities sold under a prospectus are generally freely tradeable in a secondary market, resale restrictions apply to securities sold under prospectus exemptions. So unless discretionary exemptive relief is sought and obtained, crypto-assets sold under prospectus exemptions would not be available for secondary trading.

Online platforms that offer for sale crypto-assets that are securities or derivatives or facilitate their secondary trading are subject to securities law requirements relating to registration and/or marketplaces.

Even if a particular crypto-asset is not a security or a derivative, it is possible that the way it is traded on a platform (or cryptocurrency exchange) might create a derivative or a security and require the platform to comply with securities law requirements applicable to dealers and marketplaces. See CSA Staff Notice 21-327 Guidance on the Application of Securities Legislation to Entities Facilitating the Trading of Crypto Assets for further details.

What should I consider before buying a crypto-asset?
What should I consider if I’m planning to start a business dealing or advising in crypto-assets?
What should I consider if I’m planning to start a crypto-asset trading platform?
What should I consider if I’m planning an initial exchange offering (IEO), initial coin offering (ICO) or initial token offering (ITO)?