Canadian Regulator Implements Interim Custody Rules for Crypto Platforms

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Canada’s top investment regulator has rolled out a new custody framework for digital assets, targeting the prevention of losses due to security breaches and operational failures. The rules apply to dealer members operating crypto asset trading platforms.

The Canadian Investment Regulatory Organization released its Digital Asset Custody Framework on Tuesday. It sets specific safeguarding expectations for client crypto assets held by member firms.

As an interim enforcement measure, the framework will be applied through the terms and conditions of CIRO membership. This method is intended to allow for rapid adaptation to new threats while more comprehensive, permanent rules are finalized.

CIRO indicated the rules address distinct risks associated with digital assets, learning from historical industry incidents. The 2019 downfall of QuadrigaCX, which led to substantial investor losses, was cited as a key example informing the new requirements.