Not Russia or India, but the fundamentally liberal Canada is now intervening massively in crypto trading. The Ontario Securities Commission (OSC), the regional securities regulator of the province of Ontario, has decided that crypto exchanges and brokers must submit to their new regulations. Anyone who wants to act as a fully regulated crypto trader must implement purchase limits for cryptocurrencies from now on. The new regulation applies to the following regions of Canada: Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Northwest Territories, Nunavut, and Yukon.
Retail investors from these regions are only allowed to invest 30,000 Canadian dollars (CAD) per year in altcoins via official trading venues. Professional investors, after all, 100,000 Canadian dollars. The following cryptocurrencies are excluded, which investors can continue to buy indefinitely: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. So much for the facts.
Canada: Paternalism, not consumer protection
The fact that the state is now setting its own crypto portfolio strategy is a scandal. Under the guise of consumer protection, one would like to protect investors from bad investments. This is not only an encroachment on the freedom of investors, which should be assumed in a country like Canada, but also leads to dangerous misallocations.
For example, by declaring that Bitcoin Cash and Litecoin can be purchased indefinitely, while a Cardano or Polkadot Coin can only be purchased for a maximum of CAD 30,000 per year, a dangerous suggestion of security arises. Inexperienced investors might suspect that Bitcoin Cash is a particularly promising and secure project. Of course, everyone can have a different opinion here, but quite a few crypto investors are likely to classify Bitcoin Cash as a failed hard fork. Instead of consumer protection, you send adoring signals to investors. With their ”whitelist”, the officials seem to have been stuck in the crypto year 2017.
Canadian Consumer Protection: Going Bankrupt with Pennystocks and Leverage Certificates
Considering that Canadian retail investors can invest indefinitely in dubious Pennystock shares or leveraged derivatives, where the total loss is within reach, the new directive seems particularly absurd.
Every retail investor has countless opportunities to gamble their belongings within minutes, but investing 35,000 CAD in Cardano (ADA), for example, is prohibited. The suspicion that one measures here with double standards, imposes itself. Neutrality, as demanded by the state in this context, is being thrown overboard. One can only hope very strongly that this politically motivated wrong decision will be quickly revised.
Crypto Speculation Continues to Be Allowed for Pension Funds
It is all the more cynical that the Canadian Pension Fund CDPQ has to write off 200 million CAD, because it has invested in Celsius. As an institutional investor, she is still allowed to speculate in the crypto lending sector. The requirements outlined above apply only to retail and professional investors.
