Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) jointly announced guidance for crypto trading platforms.
The pair released new advertising, marketing, and social media guidance to avoid advertising banners and statements that could mislead investors.
Thursday’s publication intends to help crypto trading platforms understand and comply with requirements under securities law and IIROC rules.
Regulators warn against gambling-style promotions
After noticing an increase in advertising and marketing by crypto trading platforms, CSA and IIROC decided to issue a warning.
Regulators were also concerned about crypto trading platforms’ use of gambling-style ads that could lead to risky trading by retail investors.
“Misleading advertisements and improper marketing strategies may encourage investors to take on risks they would normally avoid, and not respecting the requirements under securities law, and IIROC rules may raise concerns about a crypto trading platform’s fitness for registration,” said Louis Morisset, CSA chair and president and CEO of the Autorité des marchés financiers.
The publication includes examples of misleading statements in advertising and marketing materials. It also outlines CSA and IIROC staff concerns over the use of improper gambling-style contests, promotions, and schemes.
Moreover, the guidance emphasizes regulators’ compliance and supervisory expectations for firms using social media.
The guidance is for all registered crypto trading platforms. But, platforms that have applied (or will be applying) for registration should also take heed. That includes those considering establishing a platform as a new business line.
The CSA and IIROC encouraged crypto platforms to consult their legal teams before publishing advertising and marketing announcements.
“Crypto trading platforms should consider their advertising and marketing strategies in the context of their obligations to treat clients fairly and honestly,” said Andrew J. Kriegler, IIROC president and CEO. “IIROC will continue to work closely with the CSA to ensure investors are protected.”