Canadian regulators are sounding the alarm over potential risks of investing in the crypto sector, calling on multi-jurisdictional oversight and additional consumer protections.
Office of the Superintendent of Financial Institutions head Peter Routledge drew attention to the ongoing havoc FTX’s implosion is causing on the crypto sector and the need for more co-ordinated international regulatory efforts to mitigate risk for naive investors. Addressing the GRI Summit 2022 audience in Toronto, Routledge shot down the idea that the crypto sector should have a separate oversight system from that of well-established and prudent regulatory frameworks such as the ones that govern traditional banking sectors. “I just reject that… entirely,” he said, adding that the crypto sector’s lack of adequate regulation poses substantial risk.
Although acknowledging that federal and provincial jurisdictions have their own respective constitutional requirements, Routledge said regulatory bodies should make efforts to “capture the risks that migrate across” the different regions. Canadian investors “expect us to make the extra effort to figure out where there might be gaps and cover them up through negotiation,” he explained. “We’re… protecting the same people.” Likewise, Ontario Securities Commission chief executive Grant Vingoe echoed similar sentiment, pointing out that global firms conducting “opaque” activities such as FTX can create “really significant impacts” for investors in Canada.
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The ongoing FTX carnage “highlighted the need for regulation on a collaborative basis, globally,” Vingoe said. In light of the sudden and alarming liquidity crisis that hit Sam Bankman-Fried’s crypto exchange like a freight train this week, Vingoe said its a wakeup call for regulators to step up their efforts in education and oversight. It’s “really challenging to regulate,” he recognized, adding that Canadian regulators’ efforts “should be judged over the next few years.”
Information for this briefing was found via the Financial Post. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
