On March 11, the Canadian Securities Administrators (CSA) released CSA Staff Notice 51-363 Observations on Disclosure by Crypto Assets Reporting Issuers (the Notice) to provide guidance to reporting issuers (other than investment funds) that engaged in crypto assets via mining and/or the holding/trading of those assets in meeting their ongoing continuous disclosure obligations.

The CSA guidance relating to disclosure include:

• Safeguarding of Crypto Assets: the CSA outlined crypto issuers can expect CSA staff to focus its reviews on disclosures of these controls. Relevant controls may include, among other things, multi-signature wallets, safeguarding of private keys, the use of “cold wallets” and frequent monetization of crypto assets into fiat currency.

• Use of Crypto Asset Trading Platforms: issuer relying on a crypto asset trading platform to hold their crypto assets, must disclose, at a minimum, all the items referenced in the “Safeguarding of Crypto Assets” section of the Notice when using third party custodians.

• Description of business should be ‘sufficiently detailed to enable investors to make informed decisions about whether to buy, sell or hold the issuer’s securities’.

• Risk factors disclosures should be ‘specific and sufficiently tailored to the risks that relate to the issuer and its business’ as the risks of holding cryptocurrencies such as bitcoin or Ether may be significantly different from investments in other digital assets.

• Material changes report: for an event that is considered as a material change (see example provided by the CSA), issuers are required to immediately issue and file a news release disclosing the nature and substance of the change within 10 days of the date on which the change occurs.

• Investment fund requirements: where relevant issuers must consider to apply some of the requirements concerning investor protection under the investment funds regime prior to the issuance of a prospectus receipt.

This Notice should be carefully considered by Crypto issuers considering filing a prospectus or entering into a restructuring transaction to enter the Canadian public markets.