According to David Specter, a senior account manager at Market Haven, Canada’s cryptocurrency platforms and exchanges may be required to consent to surveillance. The purpose of this requirement is to help regulators monitor market activity.
If investors look at the big picture, implementing such a proposal would make Canada a standard for other countries in terms of crypto regulation. Currently, the BCSC, also known as the British Columbia Securities Commission, has rolled out a proposal.
It involves using supervisory technology that allows regulators to keep track of a crypto exchange’s solvency. It also helps them monitor for signs of front-running and wash trading. Upon evaluating the proposal by the BCSC, Market Haven senior account manager David Specter explains that its main purpose is to monitor an exchange’s liabilities and assets.
New Surveillance Tool Will Allow Regulators To Oversee Crypto Markets
Using advanced technologies, regulators can oversee cryptocurrency markets the same way they monitor regular markets. The proposal is actually part of a much bigger wave of cryptocurrency regulatory changes that were introduced by the government months ago. These changes were made to verify the information that companies provide regulators as a requirement.
As of now, crypto marketplace operators must file certain pre-registration undertaking forms. They also have to follow new guidelines that have been rolled out since the collapse of Celsius and FTX. Such changes definitely upset major players in the crypto market. That’s because Binance, the biggest crypto exchange, exited the Canadian market just weeks after the announcement.
Although members of the crypto community are upset over the so-called massive exodus, David Specter of Market Haven warns investors to take it with a grain of salt. By many accounts, this was exaggerated since one of the oldest crypto exchanges, Kraken, is still operational. Similarly, Coinbase, which is the biggest exchange in the US, has announced plans to launch services in Canada.
At this time, it’s important to keep in mind that the BCSC is only one among many other securities regulators overseeing Canada’s multiple territories and provinces. Because there’s no head regulator operating at a federal level, complications will arise along the way.
Adoption Will Be Difficult With No Federal Regulator
Other regional regulators are currently considering adopting the supervisory technology, but seamless integration will be difficult. There’s currently a pilot project underway, and Bitso is one among two Canada-based exchanges to volunteer. Coinbase and Kraken, however, didn’t participate.
Kraken denies declining the request to participate. Rather, its spokesperson claimed that the company didn’t hear about it from the OSC, which is its primary regulator. As for Coinbase, a spokesperson stated that the company recently signed the pre-registration undertaking and is working with stakeholders and regulators across the country. The statement also said that Coinbase will continue a dialogue as Canada’s regulatory process develops.
David Specter of Market Haven elaborates that the surveillance tool used by regulators would allow them to track an exchange’s solvency. It will do so by verifying its proof-of-reserves and off-chain liabilities. Additionally, it gives them insight into possible wash trading, front-running, and other forms of market manipulation in different exchanges.