The Canadian Securities Administrators (CSA) released a Staff Notice this week (June 11, 2018) providing additional guidance on the securities law implications for offerings of coins and tokens.  The notice was prepared by the CSA in response to common inquiries from cryptocurrency businesses and their advisors. Specifically, the notice addresses the sale of “utility tokens” and identifies scenarios where these sales may also have elements of investment contracts and be subject to securities regulation.  


On the topic of utility tokens, CSA Staff Notice 46-308 states:

“We have received submissions from businesses and their professional advisors that a proposed offering of tokens does not involve securities because the tokens will be used in software, on an online platform or application, or to purchase goods and services. However, we have found that most of the offerings of tokens purporting to be utility tokens that we have reviewed to date have involved the distribution of a security, namely an investment contract. The fact that a token has a utility is not, on its own, determinative as to whether an offering involves the distribution of a security.”


The notice goes on to highlight a few common scenarios for proposed coin and token offerings that could give rise to various securities law implications.  These scenarios include situations where:

  • A token is intended to be used in the operation of software or an online application that does not yet exist or is still under development, or the token is intended to be used to purchase goods and services that are not yet available
  • Tokens are not immediately delivered to buyers once purchased
  • The stated purpose of the offering is to raise capital, which will be used to increase the coin or token’s value or support the business issuing the coin or token
  • A business offering the coin or token or involved in its sale makes statements suggesting that the coin or token will become more valuable, or take other steps to create an expectation of profit


The CSA advises that any business seeking to offer coins or tokens to Canadians consult qualified securities legal counsel.  The CSA also invites applications to the CSA Regulatory Sandbox, which allows fintech companies an opportunity to test and develop innovative business offerings in an environment where they can work collaboratively with regulators and have temporary exemption from some consequences of securities regulation that may otherwise apply.  The sandbox approach to regulation is something that has also been pursued in Bermuda and the UK.

Who are the Canadian Securities Administrators (CSA)?

While most countries have national securities regulators, Canadian securities regulation is solely the jurisdiction of provincial and territorial governments.  The Canadian Constitution divides powers between the federal and provincial government and gives provinces the jurisdiction to regulate property and civil rights.  These provincial and territorial regulators are participants of the Canadian Securities Administrators, which is an organization that aims to promote consensus and harmonized regulations across the different jurisdictions.


What are “Staff Notices”?

Staff notices are issued either by a single regulator or by a group of regulators, such as the CSA.   Staff notices do not change securities legislation, reporting requirements or other policies and procedures.  Instead, the notices provide businesses and the public with insight into how regulators are interpreting and applying existing regulations.  The notices often focus on recent issues or areas of concern for the regulator and attempt to provide guidance on these matters to businesses and other market participants.  

QuadrigaCX is a Vancouver, Canada based cryptocurrency exchange that hosts ten trading pairs. It finds itself at number 20 on BlockExplorer’s top 25 cryptocurrency exchanges of 2017 list.

QuadrigaCX is well equipped for any traders looking to trade with CAD. There are a large number of options for both CAD and USD deposit and withdrawal. QuadrigaCX offers an API for programmatic trading. As such, it is recommended for any level of Canadian trader looking for a local exchange.


quadrigacx cryptoURL:
Launched: 2013
Trading pairs: 10
Deposit Fees: Yes (Not for crypto)
Withdrawal Fees: Yes (Not for crypto)
Trading fees: Yes 0.2% – 0.5%
Verification: Yes, two levels
Margin Trading: No


Registering on QuadrigaCX is a single step process that requires an email address, your first and last name, and a PIN that will be used when making transactions.


There are two methods of acquiring verification on QuadrigaCX. It is recommended you complete both, as some of the fiat funding methods available require you to have completed a specific verification method.

The first verification method is to upload a copy of your ID and a proof of residence. And the second asks you questions about your credit information, provided by Equifax.


QuadrigaCX does not use the usual maker/taker scheme for its fees. Instead, QuadrigaCX has flat fees for trading pairs. Specifically, 0.5% for BTC/CAD, BTC/USD, ETH/CAD, LTC/CAD, BCH/CAD and BTG/CAD, and 0.2% for ETH/BTC, LTC/BTC, BCH/BTC and BTG/BTC.

For deposits and withdrawals, QuadrigaCX charges no fees for crypto or most fiat, with only CAD having fees for some methods. You can see an overview of the fees on QuadrigaCX’s funding page. There are very small minimum limits on crypto deposit and withdrawal, while fiat has both minimums and maximums that change depending on the deposit or withdrawal method used.


The interface QuadrigaCX provides is an off-white with muted colors. While there is, unfortunately, no dark mode available, the off-white background with muted colors is not as overly bright as some other exchanges.

At the top of the page, you will find information about the currently selected trading pair, a place to select trading pairs and your current balances.

The trading interface is broken into tabs, and unfortunately, there is no way to get a chart, an order book, and an order submission form on the same page. All of the tabs have a vertical design, which leaves a substantial amount of dead space on either side of the interface. Overall, while the trading interface does provide enough information, it could be laid out more efficiently.


QuadrigaCX has excellent security practices. When making any transaction, you are required to enter an additional pin for confirmation. The login page is protected from replay attacks by way of a timeout. You can secure your account with Two Factor Authentication, which can be either email based or Google Authenticator based. And to top it all off, you can have all email sent to you from QuadrigaCX encrypted with your PGP key.

Some ambiguous wording during the registration process implies that you will be emailed both your password and transaction pin. The resulting email does not contain any sensitive information other than your client ID.

coinsquare fomo billboard

A new billboard in Toronto, Canada reads: “FOMO is a MOFO.” Without delving into the potential emotional traumas of trading cryptocurrencies on cryptocurrency exchanges, this statement is fitting given the recent day’s cryptocurrency trading performance. FOMO stands for Fear Of Missing Out while MOFO stands for (children cover your ears) motherfucker. The billboard was spotted by Redditors after going live.

Without delving into the potential emotional traumas of trading cryptocurrencies on cryptocurrency exchanges, this statement is fitting given the recent day’s cryptocurrency trading performance.

Another set of TV ads, which aired during the NHL playoffs highlight the sketchy nature of buying cryptocurrency from not-an-exchange. One such “crypto dealer” says simply, with a giant grin on his face:

“What color do you want your lambo?”

With ads like this, can we say that cryptocurrency has gone mainstream and everyone has FOMO?

In the past, BitPay has sponsored an American college bowl – renaming it the Bitcoin Bowl. While such bold attempts to promote Bitcoin don’t quite happen the same way anymore – it’s hard to say that the extraordinary effort back then, while not necessarily appreciated then, didn’t lead to a world where it’s frankly not that weird that a cryptocurrency exchange has taken out a prime time TV commercial. Whether more than half the people seeing the commercial can describe what digital currency is – or express actionable interest in trading it with a professional exchange as opposed to fictional lambo promisers – remains to be seen.

From within the bubble – It sure looks like cryptocurrency is mainstream now, doesn’t it! Welcome to the future.

What do you think about Coinsquare’s latest “Do digital currency right” campaign? Let us know in the comments below.

Featured image from frogyprod.

 The Bank of Montreal (BMO) is the latest Canadian bank to restrict its retail customers from making cryptocurrency transactions.  In a decision first reported on reddit in late March and confirmed last week in a statement to CoinDesk, BMO has blocked all cryptocurrency merchant transactions processed through its MasterCard credit cards (business and personal), debit cards, and Interac Online Payment.  

The decision follows a move by the Toronto-Dominion Bank (TD Bank), which announced in late February that it would be restricting its customers from using the bank’s credit cards to purchase cryptocurrency.  It remains unclear whether other Canadian banks will follow suit. In a statement made to The Globe and Mail, the Royal Bank of Canada (RBC) cautioned customers that drops in the value of purchased cryptocurrencies may expose clients to higher levels of debt than they are able to repay.  The Bank of Nova Scotia (BNS, Scotiabank) also advised that it was currently in the process of reviewing its policy on cryptocurrency transactions.

With Canadian Banks Targeting Cryptocurrency Transactions – Users Turn to Alternatives

As financial institutions consider restricting cryptocurrency transactions, Canadian seeking to exchange cryptocurrency are increasingly exploring alternative solutions, such as turning to peer-to-peer solutions including Local Bitcoins and Cancoin.  Where available, Bitcoin and other cryptocurrency “ATMs” are also an option.  Cryptocurrency ATMs are also known as “automatic exchangers”.  Unlike traditional ATMs, they do not connect directly to a user’s financial institution or the Interac service.  The ATMs work by converting deposited bills into cryptocurrency (usually Bitcoin), deducting transfer fees, and moving the remaining cryptocurrency into a specified wallet.   While cryptocurrency ATMs allow users to exchange cash for cryptocurrency, and in some cases, exchange cryptocurrency for cash, most ATMs only provide services in Bitcoin and transfer fees can vary.

Some Canadians are also moving their retail banking accounts to co-operative financial services providers, including local credit unions (or caisses populaires in French).  Credit unions are primarily regulated at the provincial level and may or may not have crypto-friendly policies and practices.  However, even if your financial institution or local credit union permits cryptocurrency transactions, risk-conscious consumers should be aware that if the funds are held in a currency other than CAD, deposit insurance protections may not apply.