Group items matching

in title, tags, annotations or url

The Bank of Canada published a paper that provides an overview of crypto exchanges, contrasting their design with exchanges in traditional financial markets and discussing emerging regulatory trends and innovations aimed at solving the problems crypto-asset exchanges face. It draws particular attention to the "vast amounts" of crypto-assets that crypto exchanges hold on their users' behalf, "exposing users to continued losses from hacks, price dislocations and the whims of exchanges and third-party processors. The paper also points to important regulatory and oversight gaps between crypto exchanges and the infrastructure that supports traditional financial markets.

The Inter-American Development Bank (IDB) provided an update on Project FuSSE (Fully Scalable Settlement Engine), a joint project with the Bank for International Settlements (BIS) Innovation Hub and Bank of Canada. It is an initiative that offers open-source technology among central banks to facilitate the implementation of payment systems and other settlement infrastructures to advance financial inclusion Latin America and the Caribbean. It will also provide technical assistance for regulatory design and institutional capacity improvement.

The Bank of Canada (BOC) published a paper that describes the ecology of automated market makers (AMMs) used for the pricing and trading of crypto assets within decentralized finance (DeFi). It uses blockchain data to identify trends in user adoption and trading volumes of AMMs. Given the range of AMMs available and the diversity of their designs, the paper performs case studies on four platforms-Uniswap, Curve, Sushiswap and Balancer-to represent the AMM market. It describes the designs of these four AMMs in terms of their products or services, governance, incentives for participation and risks. Finally, the paper describes the characteristics of AMMs that require considerations with respect to the application of a regulatory framework to AMMs.

"Ernst and Young (EY), the court-appointed monitor for collapsed Canadian crypto exchange QuadrigaCX, has proposed transitioning the company from a restructuring process to bankruptcy proceedings."

Quadriga cofounders Michael Patryn and the now-deceased Gerald Cotten worked together for a period at Midas Gold, a digital currency exchanger that ran from 2008 until May 2013, when it was pulled offline. Now it appears their connections stretch back even further.

What does QuadrigaCX, the Canadian exchange that recently lost $190 million in users' funds and Bitfinex, which lost $850 million in funds, have in common? They both relied on a shady Panama "bank," Crypto Capital, to handle payment processing.

"According to details spelled out in Ernst & Young's fifth monitor's report released Wednesday evening, QuadrigaCX appears to have never operated as a legitimate business. By the time the dominoes fell, the exchange owed 76,000 users CA$214 million in fiat and crypto. Only CA$33 million has been recovered, which leaves CA$180 million still missing."

"The Canadian Securities Administrators (CSA) are focusing on understanding and regulating distributed ledger technology (DLT) and its related components. The Canadian securities regulatory agency included a section on DLT and crypto assets in its Business Plan 2019-2022 that was published on July 13. "

Last month, Miller Thomson, the law firm representing Quadriga's former users, asked creditors for help in identifying if the failed Canadian exchange had used a payment processor known as Crypto Capital Corp.

The report that follows provides an overview of what the Committee heard from stakeholders and learned from its examination of consumer-directed finance in other jurisdictions, formal recommendations and considerations for next steps.

The Canadian Securities Administrators (CSA) today published guidance to improve the quality of disclosures provided by issuers that engage materially with crypto assets (crypto asset reporting issuers). The notice outlines the disclosure expectations of CSA staff in key areas such as safeguarding crypto assets, the use of crypto asset trading platforms, risk factors, material changes and promotional activities. The notice also provides guidance to crypto asset issuers on navigating certain complex accounting and disclosure issues.

The survey shows that from 2016 to 2018, both the share of Canadians who are aware of Bitcoin and who own bitcoin increased. But the share of past owners also increased, suggesting an influx of Bitcoin owners who sold their holdings after 2017. The main reason for owning Bitcoin continued to be for store of value or investment purposes, though this decreased slightly from 2017. Finally, Bitcoin owners differed from the overall population in two ways: they were less financially literate and more likely to say they plan to stop using cash.

A letter sent by law firm Miller Thomson to the Royal Canadian Mounted Police (RCMP) asks for the authorities to dig up and examine the body of Gerald Cotten, who reportedly died of complications due to Crohn's disease at the end of December 2018. Cotten was 30 at the time.

Canadian digital bank VersaBank plans to launch a Canadian dollar-pegged stablecoin. VCAD will be issued by VersaBank to financial intermediary partners in exchange for Canadian dollar deposits. The partners will then offer VCAD directly to individuals and businesses for use in commerce. VCAD will be redeemable for Canadian dollars as required.

The Bank of Canada's latest Cash Alternative Survey (CAS) found that Canadians' cash holdings remain stable, and crypto-asset adoption remains limited and concentrated among few demographics. It found that only 5% of Canadians own crypto-assets (5%), though 85% had heard of them. 8% of people classed as having low financial literacy said they own crypto-assets, compared to 4% among those classed as having high financial literacy. But 90% of people with high financial literacy are aware of crypto-assets, versus only 72% of those with low financial literacy.

Bitfinex said it would be immediately closing the accounts for Ontario-based customers who have no balances on the platform. In addition, it planned to restrict access to those who do not have open positions in the exchange's peer-to-peer financing market or open margin positions. Ontario-based users who have balances or open positions on Bitfinex will no longer have access to any services starting on March 1. The exchange advised customers to withdraw funds before the effective date.

"We propose a two-phased approach. In the first phase, the BoC introduces a centralized platform as a public-good infrastructure that establishes digital cash and ensures global/domestic interoperability. In this phase, e-KYC-based authentication leverages existing private/public sector solutions but also safeguards users' privacy/data against third-party commercial interests while complying with AML/CFT. In the second phase, the BoC will expand the platform to an enterprise-level permissioned blockchain. This shared resource will transform CBDLs into "programmable e-money" within a "social operating system" that will enable Canadians to operate, innovate, compete, and thrive in this new global digital economy."

The Canadian Securities Administrators (CSA) indicated that it may allow, subject to terms and conditions, the continued trading of stablecoins or "value-referenced crypto-assets" (VRCAs). The interim framework sets certain standards to help ensure that investors receive the information they need about the assets they are purchasing, including the risks associated with them. Such information includes the composition and adequacy of reserves and their governance.

It is impossible to freeze crypto-asset address and render it useless to the owner. The only way to do that is by using force to ultimately obtaining a crypto owner's private keys. This is why fundraisers, like Nunchuk, utilize multi-signature controls. Basically, people worried about getting their crypto funds frozen should not keep crypto on centralized platforms.

"For stablecoins to flourish as widely used payment vehicles they require a proper regulatory framework. A good starting point is to adhere to the principle of "same risk, same activity, same regulation." Another worthwhile principle is to not recreate the wheel. With this in mind, this Commentary offers some suggestions as to how stablecoins and their issuers could be regulated using the existing regulatory frameworks that are applied to retail payments-system providers and deposit-taking institutions. These existing frameworks include the Bank Act, its provincial statutory counterparts, and the relatively recent Retail Payments Activities Act. We paraphrase the Financial Stability Board's high-level recommendations for global stablecoins - many of which apply in a domestic setting as well - and assign the legislation/recommendations/authority based on the Canadian context." [Jeremy Kronick & Mark Zelmer, CD Howe]