The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have recently issued a staff notice addressing improper marketing practices from Crypto Trading Platforms (CTPs) in the country and offered clarity on what rules to keep in mind.

Cleaning Up CTP Advertising

The regulators’ notice was released earlier this week on the OSC’s website. It begins stating their concerns over “certain advertising activities and marketing strategies by platforms that trade crypto assets,” emphasizing that these practices could violate securities legislation requirements, and raise public interest concerns. The specific platforms of concern were left unnamed.

It later elaborates on some of the regulators’ concerns with “gambling style” promotions and schemes these CTPs have allegedly engaged in:

“We have recently noted some CTPs using advertising or marketing strategies that include contests, promotions, bonuses and time-limits to encourage investors to engage in trading and to act quickly for fear of missing out on an investment opportunity or a reward.”

The CSA and IIROC claim that such promotions could encourage investors to make more risky investment decisions than they normally would in a non-time-sensitive environment. This activity could, therefore “violate the registrant’s obligation to treat clients fairly, honestly and in good faith.

The notice concludes with a list of example claims from CTPs that would violate Canadian securities laws, and for what reason. These include claims like “We are your cheapest and best source for Bitcoin,” should the platform be unable to substantiate such a claim with hard evidence.

Many others are presented as well, such as those involving promotion from a particular individual, or use of the words “exchange” or “marketplace” to describe their platform.

Regulatory Clarity in Canada

Though it may seem like a burden, the document shows remarkable clarity from Canadian regulators on what changes they would like to see from Crypto Trading Platforms in the country. It even presents a list of staff members from the CSA and IIROC that CTPs can contact with further questions.

This is in contrast to the United States, where regulatory clarity has been difficult for exchanges to obtain. Brian Armstrong – CEO of Coinbase – has claimed that US watchdogs have no interest in clarity, instead engaging in “intimidation tactics behind closed doors.”

Similarly, the SEC has been slow compared to Canada to implement a Bitcoin ETF, though chairman Gensler has expressed openness to a futures ETF.