Canadian stock market regulators have issued a warning to local cryptocurrency exchanges against advertisements that violate securities law.
The Canadian Securities Administrators Association (CSA) and the Investment Industry Regulatory Organization (IIROC) have issued guidelines for crypto exchange employees and managers that indicate signs of “illegal” advertising. Regulators posted the instruction on September 23, 2021 on the OSC website. The notice identifies “promotions and marketing strategies of cryptocurrency exchanges that violate securities laws and may affect the public interest.”
In the document, regulators draw attention to a number of promotions and schemes that cryptocurrency exchanges use. Among them, the most popular strategy is based on the “loss of profit syndrome” (FOMO):
“We recently noticed that cryptocurrency exchanges are using advertising or marketing strategies that include contests, promotions, bonuses and time limits to entice investors to invest, trade and do it quickly for fear of missing out.”
CSA and IIROC argue that such promotions can induce an investor to make rash decisions that they would not have made if they had not been nudged by a time limit. As a result, such advertising violates the obligation of registrants to be honest and fair with customers. .
The notice lists examples that violate advertising law, including “We have the lowest commissions” and many others. According to regulators, if the platform is unable to support this claim with strong evidence, such advertising is breaking the law.
This document will undoubtedly reduce the effectiveness of cryptocurrency exchange advertising, but it clearly shows what regulators want to achieve from trading platforms. Attached to the notification is a list of CSA and IIROC employees who can be consulted by cryptocurrency exchange operators. This document contrasts sharply with the vague requirements of US regulators for cryptocurrency exchanges.
Recently Coinbase CEO Brian Armstrong
wrotethat Wall Street watchdogs are not interested in clarity, instead they are using “behind closed door intimidation tactics”. Canadian regulators quickly approved Bitcoin ETFs, unlike the SEC. However, later, the chairman of the Commission Gary Gensler (Gary Gensler) announced a greater likelihood of ETF approval for cryptocurrency futures.
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