Not Russia or India, but essentially liberal Canada is now widely involved in cryptocurrency trading. The Ontario Securities Commission (OSC), the regional regulator for securities in the province of Ontario, has decided that cryptocurrency exchanges and brokers must comply with their new regulations. Anyone who wants to be fully regulated as a cryptocurrency trader must implement cryptocurrency purchase limits with immediate effect. The new regulatory requirements apply to the following regions of Canada: Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Northwest Territories, Nunavut and Yukon.
Small investors from these regions are allowed to invest 30,000 Canadian dollars (CAD) annually in altcoins via the official trading venues. Professional investors of at least 100,000 Canadian dollars. The following cryptocurrencies, which investors can continue to buy indefinitely, are excluded: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. So far the facts.
Canada: paternity instead of consumer protection
The fact that the country is now defining its own crypto wallet strategy is scandalous. Under the guise of consumer protection, investors want to protect themselves from bad investments. This is not only an infringement of investors’ freedom, which one would expect in a country like Canada, but it also leads to serious misallocation.
For example, when the authority declares that Bitcoin Cash and Litecoin can be bought indefinitely, while Cardano or Polkadot Coin can only be bought with a maximum of CAD 30,000 per year, a dangerous security proposition is created. Inexperienced investors may suspect that Bitcoin Cash is a particularly promising and secure project. Of course, everyone can have a different opinion here, but very few cryptocurrency investors are likely to classify Bitcoin Cash as a failed hard fork. Instead of consumer protection, signs of reverence are sent to investors. With the “whitelist” their administrators seem to be stuck in the year of crypto 2017.
Canadian Consumer Protection: With Small Stocks and Leverage Certificates in Bankruptcy
Given that Canadian retail investors can invest in questionable cash equities or leveraged derivatives indefinitely where a total loss is within reach, the new policy looks particularly silly.
Every small investor has endless opportunities to get rid of their holdings in a matter of minutes, but investing CAD 35,000 in Cardano (ADA), for example, is prohibited. The suspicion arises that there are double standards here. The required neutrality of the state in this context is being thrown into the sea. One can only hope that this wrong, politically motivated decision will be quickly reversed.
Cryptocurrency speculation on pension funds is still allowed
Even more ironic is that CDPQ has to write off C$200 million because it invested in the percentile. As an institutional investor, you are still allowed to speculate in the cryptocurrency lending sector. The above requirements apply only to individual and professional investors.
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