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Paternalism: Canada massively restricts crypto trading

 


Not Russia or India, but the fundamentally liberal Canada is now massively intervening in crypto trading. The Ontario Securities Commission (OSC), ergo the regional securities regulator for the province of Ontario, has decided that crypto exchanges and brokers must submit to their new regulations. Anyone who wants to be fully regulated as a crypto trader must implement purchase limits for crypto currencies with immediate effect. The new regulatory requirement applies to the following regions of Canada: Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Northwest Territories, Nunavut, and Yukon.


Small investors from these regions are only allowed to invest 30,000 Canadian dollars (CAD) per year in altcoins via official trading venues. Professional investors at least 100,000 Canadian dollars. Excluded are the following cryptocurrencies, which investors can continue to buy indefinitely: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. So far the facts .


Canada: paternalism instead of consumer protection

The fact that the state is now specifying its own crypto portfolio strategy is a scandal. Under the guise of consumer protection, investors want to protect themselves from bad investments. This is not only an encroachment on investor freedom, which one would expect in a country like Canada, but also leads to dangerous misallocations.


For example, when the authority declares that Bitcoin Cash and Litecoin can be bought indefinitely, while a Cardano or Polkadot Coin can only be bought for a maximum of CAD 30,000 per year, a dangerous suggestion of security is created. Inexperienced investors might suspect that Bitcoin Cash is a particularly promising and safe project. Of course, everyone can have a different opinion here, but quite a few crypto investors are likely to classify Bitcoin Cash as a failed hard fork. Instead of consumer protection, revering signals are sent to investors. With their “whitelist” officials seem stuck in crypto year 2017.

Canadian consumer protection: With penny stocks and leverage certificates into bankruptcy

Considering that Canadian retail investors can invest in dubious penny stocks or leveraged derivatives indefinitely where total loss is within reach, the new policy seems particularly absurd.


Every small investor has countless opportunities to gamble away their belongings within minutes, but investing CAD 35,000 in Cardano (ADA), for example, is prohibited. The suspicion that there are double standards here arises. The neutrality demanded of the state in this context is thrown overboard. One can only very much hope that this politically motivated wrong decision will be reversed quickly.


Crypto speculation for pension funds still allowed

It is all the more cynical that the Canadian pension fund CDPQ has to write off CAD 200 million because it invested in Celsius. As an institutional investor, you are still allowed to speculate in the crypto lending sector. The requirements outlined above only apply to retail and professional investors.

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