Canada's Investment Watchdog Unveils Crypto Custody Rules

(MENAFN- Yolo Wire) The Canadian Investment Regulatory Organization (CIRO), the country's investment regulator, has introduced a new "Digital Asset Custody Framework" to tighten rules on crypto ownership.

Specifically, the new guidelines focus on how cryptocurrencies such as Bitcoin (CRYPTO: $BTC) and Ethereum (CRYPTO: $ETH) are held.

The guidance also establishes a tiered, risk-based structure for custody that aims to let firms innovate while strengthening investor protections against hacking, fraud, and insolvency.

In a news release, the regulator said the guidelines have been developed to mitigate the damage done from the failure of crypto firms, citing the collapse of exchange QuadrigaCX.

"The new framework provides a balance between flexibility and risk management, supporting innovation while ensuring strong investor protection," said CIRO.

The failure of QuadrigaCX in 2019 stands as one of the most notorious failures in Canada's cryptocurrency sector, with $123 million of investor funds still unaccounted for.

Analysts say the new custody guidelines reflect Canada's cautious approach to cryptocurrencies and focus on investor protection.

Through regulations, Canada has brought crypto trading platforms under its existing securities laws and continues to emphasize investor safety.

Bitcoin is trading at $69,500 U.S. on Feb. 5, having declined 20% so far this year.

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