Report cautions OSC against fostering innovation at the expense of protecting investors.
The advisory panel to the Ontario Securities Commission (OSC) delivered a strong message of support for the OSC’s continuing crackdown on crypto assets.
In its 2022 annual report, the OSC’s Investor Advisory Panel said that it continues to believe crypto assets constitute a growing risk for financial consumers.
Binance said the investigation is an extremely broad inquiry into whether the platform may have circumvented Ontario securities law and compliance controls
“The Panel strongly supports the OSC’s commitment to strengthening oversight and enforcement in the crypto asset sector, and has cautioned the OSC against placing the goal of fostering innovation ahead of its central investor protection mandate,” the panel wrote.
The panel’s endorsement came as Binance, the world’s largest crypto trading platform by daily trading volume, filed a document with the Capital Markets Tribunal revealing that the OSC filed a broad investigation order against Binance. The document also included a sweeping summons.
In its document, Binance said the Investigation Order authorizes an extremely broad inquiry into whether Binance may have taken steps to circumvent Ontario securities law and compliance controls. It also asks whether Binance or Binance.com engaged in conduct contrary to Ontario securities law or the public interest, without any limitation.
The summons included a blanket request for “all communications regarding Ontario (or
Canada generally) among directors, officers, employees, contractors, agents and
consultants of Binance Holdings Limited and related entities, including Binance Canada
Capital Markets Inc. since January 1, 2021, without limitation.”
Founded by Changpeng Zhao in 2017, Binance is a cryptocurrency exchange that claims to have amassed over 120 million users globally. In addition to operating its trading platform, its other business lines include an NFT marketplace, its own token, staking services, and a blockchain called Binance Smart Chain, among others.
RELATED: Canadian securities regulators tighten rules for crypto platforms
Binance announced in mid-May that it was pulling out of Canada after new guidance related to stablecoins and investor limits made the Canadian market no longer viable for the crypto-trading platform.
The new restrictions came from the Canadian Securities Administrators (CSA) following the collapse of cryptocurrency exchange FTX.
“Recent insolvencies involving several crypto asset trading platforms highlight the tremendous risks associated with trading crypto assets, particularly when conducted on unregistered platforms based outside of Canada,” CSA chair Stan Magidson, also chair and CEO of the Alberta Securities Commission, said in a statement provided as part of the notice.
The OSC Investor Advisory Panel opined that crypto events during the year, such as the onset of the crypto winter and the FTX collapse further highlighted the need for the OSC to continue focusing on investor protection. The panel said the OSC should also keep increasing its visibility among, and education of, crypto investors.
“Further, innovative, and timely securities regulation is necessary to keep pace with a rapidly shifting investment environment seemingly filled with new and unprecedented risks,” the panel wrote. “We were pleased to see the CSA strengthen its approach to oversight of crypto trading platforms by creating and then expanding requirements for platforms operating in Canada.”
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