By a press release issued March 8, 2017, the Ontario Securities Commission (OSC) warned businesses that use distributed ledger technologies (DLT), such as blockchain, as part of their financial products or service offerings that they may be subject to Ontario securities law requirements.

The OSC noted that businesses are using DLT in a variety of ways including, with respect to initial coin or token offerings where ownership of the coins or tokens is tracked using DLT, or the establishment of investment funds with DLT-based virtual currencies in their portfolios. The OSC advised that products or other assets that are tracked and traded as part of a distributed ledger may be securities, even if they do not represent shares of a company or ownership of an entity. Accordingly, the use of DLT may trigger Ontario securities law requirements, including the need to file a prospectus or rely on an exemption from prospectus requirements or for participants to be registered as a dealer, adviser or investment fund manager.

The OSC reminded businesses to consider the types of offerings that involve securities within the meaning of securities legislation (e.g., evidence of title to or interest in the capital, assets, property, profits, earnings or royalties of any person or company, a product that is an investment contract) and the types of trading activities that will occur. In addition, the OSC suggested that businesses may contact the OSC LaunchPad to discuss the associated securities law requirements.