Ontario crypto exchanges impose $30K annual cap on altcoin purchases
Bitbuy and Newton, both situated in Canada, are imposing a $30,000 (CAD) yearly “buy restriction” for “restricted currencies” for their Ontario users in order to “protect consumers” in the face of tightening legislation.
“These measures are intended to protect crypto investors such as yourself, as well as to make investors aware of the risks connected with investing in crypto assets.”
The new regulations will subject Ontario-based crypto traders on Newton and other Canadian crypto platforms to an annual 30,000 CAD “net buy limit” on all cryptocurrency coins barring Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), and Litecoin (LTC).
Newton, a Toronto-based cryptocurrency exchange, revealed the new modifications after working with the Ontario Securities Commission and securities regulatory agencies in other provinces and territories of Canada, saying in an Aug. 16 post:
Newton went on to say that if a trader purchased and then sold a restricted coin, the sell amount would be deducted from the limit. The restriction is adjusted every 12 months, beginning with the first purchase of limited coins.
Other changes aimed at protecting consumers include a “trading questionnaire,” in which the exchange is required to collect information from users about their previous experience and knowledge of crypto investing, financial situation, and risk tolerance — all of which must be completed before the account can be funded and traded on the platform.
The buy limits come after the crypto platform revealed on Wednesday that it has formally registered as a “restricted dealer” in the province of Ontario, which means they are now subject to the Ontario Securities Commission’s regulations (OSC).
The crypto exchange will also notify traders if their portfolio experiences a loss level that they mentioned in the form that they are not comfortable with.
Bitbuy, a Canadian cryptocurrency exchange, verified similar purchase limits earlier this year, noting that similar restrictions apply to users in Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, the Northwest Territories, Nunavut, and Yukon.
Bitbuy, like Newton, needs traders to take out a questionnaire to establish whether they are a Retail Investor, Eligible Investor, or Sophisticated Investor. While Retail Investors are still subject to the 30,000 CAD buy limit, Eligible Investors’ buy limit has been increased to 100,000 CAD, and Accredited Investors have no purchase limit. Newton gave traders a preview of what they might expect when the new rules go into effect.
The province of Ontario alone accounts for over 40% of the Canadian population, with Toronto serving as the largest metropolitan centre. Newton pointed out that each province and territory in Canada has its own securities regulatory authority, which is referred to as the Canadian Securities Administrators (CSA).
Consumer protection isn’t the primary priority for Canadian authorities. The Canadian federal government said in April 2021 that it will conduct a financial sector legal review, with a special emphasis on increasing the stability and security of digital currencies and establishing a central bank digital currency (CBDC). Newton, which dubs itself as “Canada’s trust low cost crypto trading platform,” was created in 2018 and is now one of Canada’s most popular exchanges, with 100,000 customers in February 2021.
News Summary:
- Ontario crypto exchanges impose $30K annual cap on altcoin purchases
- Check all news and articles from the latest Business news updates.