The Canadian Securities Administrators Association (CSA) has provided interim guidance for cryptocurrency exchanges and stablecoin issuers regarding their operation in the country, subject to certain conditions.

The regulator said it may allow trading of some stablecoins pegged to government currencies. Issuers of these stablecoins must maintain an adequate reserve of assets and engage a qualified custodial service to hold them. Companies issuing stable cryptocurrencies are required to disclose information related to the management, operations and reserves of assets.

In February, the CSA introduced rules that would prohibit local traders from buying or selling any stablecoins that have not been approved by the Association. The agency said stablecoins are securities and derivatives that may not be allowed to be traded on Canadian cryptocurrency exchanges.

Stan Magidson, chairman of the CSA and the Alberta Securities Commission, explained that this is now only a temporary structure that can be relied upon to regulate crypto assets. It sets certain standards to ensure that investors receive the necessary information about the assets they are buying, as well as the risks associated with them.

The temporary terms and conditions are based in part on comments received from Canadian crypto market participants, as well as international standards. The CSA warned that even if stablecoins meet the new conditions, investing in them is still risky and should not be regarded as approved by the regulator.

“Transparency about stablecoins, the adequacy of their reserves and their management is a critical issue that must be addressed to protect Canadian investors and preserve the integrity of capital markets,” Magidson said.

In July, the CSA published regulatory requirements for cryptocurrency fund managers to make it easier for them to comply with securities laws. These requirements relate to the storage of digital assets, the separation of own and client funds, as well as auditing.