Custodial wallet / SaaS in Canada

FINTRAC — AML/CFT, MSB registration, transaction reporting

CSA — Provincial securities regulation — crypto trading platform registration (Staff Notice 21-327)

Proceeds of Crime (Money Laundering) and Terrorist Financing Act (2000) — AML/CFT, MSB registration

CSA Staff Notice 21-327 (2020) — Crypto trading platform registration requirements — aggressive enforcement since 2021

VASP: FINTRAC MSB registration (2-4 weeks) + provincial Restricted Dealer registration via CSA (6-18 months). Foreign platforms serving Canadians must register or face enforcement. Binance exited Canada rather than comply.

CUSTODY: Qualified Canadian custodian required for registered platforms. Client asset segregation mandatory.

EXCHANGE: MSB (FINTRAC) + Restricted Dealer or Marketplace registration (provincial). Pre-registration undertakings prohibit margin trading and restrict altcoin offerings. $50K-$100K minimum capital for restricted dealers.

Securities industry professionals must register with the securities regulatory authority in each province or territory where they do business

The ultimate authority for licensing requirements rests with each provincial securities commission

The Canadian Securities Administrators (CSA) coordinate provincial regulators through a passport system

Anyone in the business of trading securities or advising clients on securities must be registered with the securities regulator in each province or territory where they do business, unless an exemption applies

Registration framework is established through National Instrument 31-103 (NI 31-103) — Registration Requirements, Exemptions and Ongoing Registrant Obligations

All registrants must maintain minimum capital and insurance based on registration category and business activities; non-IIROC firms require CAD 25,000 to CAD 100,000 depending on category

All registrants must designate a Chief Compliance Officer (CCO) approved by the regulator who must complete the Exempt Market Products Course (EMPC) or equivalent plus CCO training

CSA Staff Notice 21-327: Guidance on Securities Legislation for Crypto Asset Trading (via BCSC or CSA sites).

OSC Crypto Businesses guidance (osc.ca/en/industry/registration-and-compliance/crypto-businesses).

Canadian Securities Administrators (CSA): The umbrella organization coordinating provincial and territorial securities regulators, issuing national guidance for crypto asset trading platforms.

Ongoing Focus on Unregistered Platforms: Securities regulators continue to target platforms operating in Canada without registration. This often results in cease trading orders, financial penalties, and requirements for platforms to either register or exit the Canadian market.

Many international crypto trading platforms that previously operated without registration have entered into pre-registration undertakings (PRUs) with provincial commissions, which are formal agreements required to continue operating while pursuing registration, rather than post-hoc settlements for past non-compliance.

Bybit: In March 2023, the OSC reached a settlement with Bybit, requiring the platform to pay $2,468,982 and provide an undertaking that it would not operate in Ontario without registration.

KuCoin: In June 2022, the OSC obtained orders against KuCoin (Mechbit Technology Ltd.) permanently banning it from participating in Ontario's capital markets and requiring it to pay an administrative penalty of $1,650,000 and $99,754 for costs.

Binance: Following a pattern of non-compliance, Binance entered into an undertaking with the OSC in December 2022 to cease all operations in Ontario. Later, in May 2023, the AMF imposed an administrative monetary penalty of $2.25 million on Binance for operating an unregistered platform and offered non-compliant derivatives in Quebec.

FINTRAC website: www.fintrac-canafe.gc.ca