In a significant move to bolster investor protection in the cryptocurrency space, the Canadian Investment Regulatory Organization (CIRO) has rolled out an interim Digital Asset Custody Framework. As emphasized in the official statement, this initiative aims to enhance the oversight of crypto assets held on trading platforms, addressing concerns raised by previous market failures.
New Custodian Framework Introduced
The newly introduced framework categorizes custodians into four distinct tiers, each defined by their capital, insurance, and operational safeguards. Tier 1 and Tier 2 custodians are permitted to hold up to 100% of a Dealer Member's client crypto assets, while Tier 3 and Tier 4 custodians are subject to lower limits, reflecting their varying levels of security and reliability.
Regulatory Shift for Enhanced Security
This regulatory shift is designed to prevent the recurrence of past failures in the crypto market, ensuring that platforms either improve their custody arrangements or reduce their in-house holdings. Additionally, the framework mandates increased regulatory oversight, requiring custodians to submit compliance documents and proof of insurance, thereby enhancing the overall security of digital asset management in Canada.
In a related development, the Moscow Exchange has expanded its digital asset offerings, introducing new indices and futures contracts for cryptocurrencies like XRP and Solana. This move aims to enhance trading options in the market, complementing the recent regulatory changes in Canada. For more details, see futures contracts.
