In the past few months, a number of securities regulators, including the Ontario Securities Commission (OSC), have taken steps to stop securities-related activity concerning USI Tech Limited (USI Tech), which purported to offer a bitcoin trading platform. In Ontario, a temporary cease-trade order was issued against USI Tech and two Ontario residents because OSC staff were concerned that the individuals might have been engaging in the business of advising on securities without being registered and that USI Tech and the two individuals were distributing securities of USI Tech without a prospectus. Staff’s investigation is ongoing and one of the key issues that they will have to address is whether the products offered for sale are “securities” within the meaning of the Securities Act.
This case is just one example of securities regulators’ efforts to identify issues and deal with potential regulatory gaps arising from cryptocurrency, initial coin and similar offerings, and blockchain developments. As reflected in the OSC’s draft Statement of Priorities for 2018-19 (discussed below), we expect to see continued regulatory focus on these issues.