The Investment Industry Regulatory Organization of Canada previewed areas of likely regulatory attention in 2019 based on issues identified throughout its 2018 compliance and registration activities. Among the areas of focus are cybersecurity, electronic trading controls, best execution, wash trading, compensation-related conflicts of interest, and issues around automated/online advice services. IIROC also noted that, in conjunction with the Canadian Securities Administrators, it is working to develop “an appropriate regulatory framework” for digital assets that will address both market integrity and investor protection. No details were provided. However, last year CSA issued guidance regarding when digital tokens are subject to securities laws and not utility tokens. (Click here for background in the article “Anything but Sleep Inducing: SEC Corporate Finance Director Says Ether Not a Security and Canada Issues Guidance on Utility Tokens” in the June 17, 2018 edition of Bridging the Week.)
Earlier this year, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations said that digital assets, cybersecurity and anti-money laundering programs would be among its top priorities during its 2019 reviews of registrants. (Click here for details in the article “Offer and Sale of Digital Assets and Cybersecurity Among the Focus of SEC OCIE 2019 Examination Priorities” in the January 6, 2019 edition of Bridging the Week.)
IIROC is the self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.
In additional legal developments regarding cryptoassets:
- Wyoming Proposes Law to Permit Companies to Issue Digital Tokens in Lieu of Stock Certificates: Representatives in Wyoming’s House of Representatives introduced a proposed law that would authorize corporations to issue all or a portion of their shares in the form of certificate digital tokens instead of stock certificates. As proposed, a certificate token would be a representation of shares containing certain required information where the information is entered on a blockchain or other secure and auditable database; is linked to the certificate token; and is able to be transmitted to the issuing corporation, the person to whom the certificate token was issued and any transferee.
- Congressman Reintroduces Bill to Exempt Certain Crypto Companies from State Money Transmitter Statutes: Congressmen Tom Emmer and Darren Soto reintroduced a bill in the new Congress that would exempt from registration as a money transmitter in any state or as a money service business with the Financial Crimes Enforcement Network of the US Department of Treasury any blockchain developer or provider of blockchain services that does not accept funds from consumers. This bill had previously been introduced during the last term of Congress.