Kraken aims for restricted dealer registration in Canada to comply with new rules

Crypto exchange Kraken has filed a preregistration undertaking with the Ontario Securities Commission in Canada seeking restricted dealer status. U.S.-based Kraken is already active in Canada and is acting to comply with new guidance.

Kraken is registered in Canada as a money services business and has been operating there for over ten years. The Canadian Securities Administrators (CSA) implemented new guidance for crypto asset trading platforms on Feb. 22, requiring Kraken to file a preregistration undertaking legally committing it to observe new investor protections.

The new requirements crypto trading platforms will be subject to include new custody standards, restrictions on the use of leverage and a ban on trading stablecoin without prior written consent from the CSA. Kraken managing director for Canada Mark Greenberg said:

“We want both existing and prospective clients to know Kraken remains committed to Canada.”

Restricted dealer registration is “a special kind of dealing registration used for firms that do not quite fit under any other category” under CSA definitions. Regulators tailor requirements for firms with this status individually.

CRYPTO changes for Canada are coming! #crypto #Bitcoin #canada pic.twitter.com/40qLdQLLru

— megbzk (@megbzk) March 26, 2023

Cryptocurrency exchange OKX announced on March 20 that it would stop providing service to Canadian customers within three months due to “new regulations.” OKX added that its withdrawal from the country was temporary and it was working with regulators.

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The CSA is the umbrella organization for Canada’s 13 regional securities regulators. There is no federal Canadian regulator. Registration by one CSA member provides a so-called “passport” for firms doing business in other provinces or territories.

In February, Kraken paid $30 million in penalties and disgorgement in the United States after the Securities and Exchange Commission charged it with failing to register its staking-as-a-service program as a security. Kraken said at the time that it would continue to offer its staking program to non-U.S. customers.

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