What is a crypto asset trading platform?

A crypto asset trading platform (CTP) allows you to buy, hold, sell, stake, deposit and withdraw crypto assets through a website or a mobile application.

Trading crypto assets on a trading platform is akin to do-it-yourself investing and requires time, knowledge, skill and research. Another way to invest in crypto assets would be to get advice from a person who is registered to provide recommendations. They would assess whether investing in crypto assets or other options for investing in crypto, such as investing in an exchange-traded investment fund that holds crypto assets, would be suitable for you.

What does checking the registration of a crypto asset trading platform mean?

In Canada, crypto asset trading platforms must be registered. This includes platforms that provide custody of crypto assets (i.e., they do not immediately deliver the crypto assets to a wallet solely controlled by you) or trade in crypto assets that are themselves securities. These platforms are subject to regulatory requirements that help protect investors.

There are several crypto asset trading platforms that have taken steps to be registered in Canada. Checking registration status, before you start trading, will help you ensure the platform you’re about to open an account with is regulated, is not operating illegally and is not a fraudulent platform.

To check if a platform is registered, visit the Ontario Securities Commission’s list of registered crypto asset trading platforms. You can also search for the platform’s name in the National Registration Search.

Crypto assets are generally high risk, even if they are available on a registered crypto asset trading platform. The level of risk is elevated if you use a crypto asset trading platform that is not registered. In fact, the OSC has taken enforcement action against several unregistered crypto asset trading platforms.

 Remember to check if the platform has been sanctioned by a member of the Canadian Securities Administrators on the Disciplined List. And avoid platforms banned by the CSA. You can also check if a platform you may be considering has any investor warnings and alerts issued against it.

In general, anyone selling securities or offering investment advice must be registered with their provincial securities regulator. Visit CheckBeforeYouInvest.ca to learn more.

The Canadian Securities Administrators has more information on Crypto Trading Platforms: Regulation and Enforcement Actions.

The risk of using a crypto asset trading platform that is not registered includes it being part of a crypto scam or involved in fraud. In some cases, fake investing websites could be used as part of a crypto scam or a pig butchering scam. Sometimes fake websites pretend to be the website of a registered crypto asset trading platform. Essential safeguards that help protect investors’ assets from loss, theft or misuse may not be in place if the crypto asset trading platform is not registered. Find out more about the risks of investing in crypto and the red flags of crypto fraud. 

What fees do crypto asset trading platforms charge?

Crypto asset trading platforms charge various fees for their services. They may charge one or more of the following:

• Trading fees: Costs associated with buying and selling crypto assets. Trading fees are sometimes embedded in the pricing of the crypto assets offered (which can include “spreads” and costs set by the crypto asset trading platform).
• Staking fees: Charges for participating in staking activities which are usually applied on the rewards earned from staking.
• Custody fees: Indirectly charged fees for holding and securing your crypto assets.
• Withdrawal/deposit fees: Fees associated with depositing or withdrawing assets. In addition to any withdrawal/deposit fees charged by the crypto asset trading platform, there are blockchain network fees that are charged when crypto assets are transferred to different wallets, including to and from the platform’s custody wallet. 

Why do trading platforms ask you for your personal financial information?

Crypto asset trading platforms are legally required to ask you for information about your financial circumstances, risk tolerance and trading experience. They have a regulatory obligation to understand your situation to assess the appropriateness of opening a crypto account and setting client loss limits that are tailored to your specific circumstances and to comply with anti-money laundering legislative requirements. 

It is important that you provide accurate information and keep it up to date. Crypto asset trading platforms have a legal obligation to keep this information private and confidential. 

If you are not asked for your personal information (including financial circumstances, risk tolerance and trading experience) it may be a red flag that the trading platform is not legitimate, or it is not meeting its regulatory obligations. You should also consider reporting the platform to the securities regulator in the province where you live and/or where the business is located.

Find out more about how crypto assets are regulated.

Is there a cap on how much you can invest?

Crypto asset trading platforms that are registered in Canada are required to establish client limits and, in some provinces and territories, investment limits.

• Client limits – In all Canadian provinces and territories, crypto asset trading platforms are required to establish and apply client loss limits. These limits are meant to reflect your ability to tolerate losses and ensure the platforms protect you from taking on excessive risk, which is assessed considering your individual circumstances.  
  Additionally, registered crypto asset trading platforms are required to monitor your losses on their platform and provide warnings and/or educational materials when your losses approach or reach your assessed client loss limit. This is to help ensure you are aware of your current loss position and help you better manage your crypto investments on a crypto asset trading platform.
  
• Investment limits –In Ontario and many other Canadian jurisdictions there is an overall limit on how much you can invest in most crypto assets on a platform. These caps are called investment limits. 
  The investment limit is $30,000 which applies to most crypto assets available on a platform. Crypto asset trading platforms are required to ensure these limits are not exceeded when you invest on their platform if you are a resident of a Canadian jurisdiction where the limit applies.                                            

What do you do if you have a complaint or are having trouble withdrawing funds?

If you have a complaint or are experiencing trouble withdrawing funds, follow complaint handling procedures provided to you by the crypto asset trading platform. You can contact the platform for information on filing a complaint. Clients of a crypto asset trading platform that is a CIRO member can access information from CIRO on how to make a complaint.

If you are dissatisfied with the outcome of your complaint to the crypto asset trading platform, you can contact the Ombudsman for Banking Services and Investments for assistance.

You can also file a complaint with the OSC, including where you have concerns with the crypto asset trading platform or think you have been scammed. You can contact the OSC using an online form, or call 1-877-785-1555 or email inquiries@osc.gov.on.ca.

Crypto assets are generally considered high risk. Purchasing crypto assets is generally a speculative activity and their value and liquidity are highly volatile. Find out more about crypto assets and how they work.

What happens to your assets if your crypto asset trading platform goes insolvent?

The Canadian Investor Protection Fund (CIPF) coverage for securities held in an account with an investment dealer upon a member firm’s insolvency explicitly excludes crypto assets.

CIPF does not cover losses of crypto assets if a crypto asset trading platform goes insolvent.

If you lost assets, you’ll have to wait for insolvency proceeds to play out which may take years and may result in you not recovering anything or only a portion of your assets.

If you’re considering investing in crypto assets, you should beware of the risks. You could lose some or all of your money.

Crypto assets are explicitly excluded from Canadian Investor Protection Fund (CIPF) coverage.

What should you expect from a crypto asset trading platform?

Before you buy any crypto assetAsset Something of value that a company or an individual owns or controls. Examples: buildings, equipment,…+ read full definition, check whether the crypto asset trading platform meets these criteria:

• The platform is registered –If you are considering investing in crypto assets, always work with a registered crypto asset trading platform. These platforms must meet certain regulatory requirements that help protect investors.

• You’re asked client-oriented questions before opening an accountAccount An agreement you make with a financial institution to handle your money. You can set…+ read full definition – Before allowing you to open an account, the trading platform must comply with applicable Know your Client requirements under securities law. They also must satisfy anti-money laundering regulations and FINTRAC guidelines and requirements. The crypto asset trading platform also must determine if it’s appropriate for you to have a crypto account, taking into account:
  • Your experience and knowledge in investing in crypto assets.
  • Your financial circumstances.
  • Your risk tolerance.
  • The crypto assets made available to you.

• You’re provided information about the crypto assets – You get a description of the crypto assets, the location and way the crypto assets are held on your behalf. You are also told how the crypto assets are accessed by the trading platform and the associated risks and benefits.

• You can find out how crypto assets are priced – Prices for crypto assets can vary across different platform. Factors like the platform’s trading volume, whether prices are based on internal order books or external market feeds, and any fees or spreads added by the platform can all influence the price you see. You should check the CTP’s website to find out how it determines the buy and sell amounts (known as the “bid” and “ask”). If that information isn’t clearly available, ask the CTP how it determines the prices it quotes when you request a tradeTrade The process where one person or party buys an investment from another.+ read full definition.

• Your assets will be held by a licenced third-party custodian –Currently, a trading platform is not permitted to hold all its clients’ crypto assets in its own hot or cold wallets. Instead, the platform must use an acceptable third-party custodian that it has conducted appropriate due diligence on, and it must hold at least 80% of its clients’ crypto assets. The third-party custodian must be registered or licenced by the appropriate authorities in its home jurisdiction and have proper controls and processes in place.