The Canadian Investment Regulatory Organization (CIRO) has announced that cryptocurrency funds will not qualify for reduced margin rates due to the volatility of cryptocurrencies.
CIRO's Decision on Crypto Funds
CIRO has released its updated list of securities, excluding cryptocurrency funds from reduced margin eligibility. This decision is due to concerns around cryptocurrency volatility, liquidity risks, and regulatory uncertainties.
Criteria for Reduced Margin
To qualify for reduced margin, a security must exhibit high liquidity, significant market capitalization, and low volatility. The criteria include a price volatility margin interval of 25% or less, with a market value of at least CA$ 2 per share. Liquidity requires a public float over CA$ 100 million and an average monthly trading volume of at least 25,000 shares.
Warning from FINTRAC
Canada's FINTRAC issued a warning on the increased use of cryptocurrencies for laundering funds from trafficking synthetic fentanyl and opioids. New risk factors highlighted include significant crypto-to-fiat conversions, multiple wallet usage, and transactions from high-risk regions.
CIRO's decision to exclude crypto funds from reduced margin rates underscores concerns about cryptocurrency volatility and regulation, emphasizing the importance of adapting to new risk factors.
