On September 23, the Investment Industry Regulatory Organization of Canada (IIROC) together with the Canadian Securities Administrators (CSA) issued a Joint Staff Notice 21 – 330 – Guidance for Crypto-Trading Platforms: Requirements relating to Advertising, Marketing and Social Media Use (the ‘Staff Notice’).
The Staff Notice, as its name suggests, aims at ensuring that advertising activities and marketing strategies by Crypto-Trading Platforms (‘CTPs’) comply with securities legislation and take into consideration investor protection.
The Staff Notice advises CTPs to be cautious of the following.
False and misleading statements in advertising and marketing materials which are prohibited in securities legislation and IIROC rules. For example, suggesting wrongly that a CTP is registered under securities regulations.
Gambling-style contests, promotions or schemes that encourage excessive trading by retail investors and violate their obligations to treat clients fairly, honestly and in good faith.
Social Medial use must be subject to compliance and supervisions policies, with the recommendation that CTPs maintain records of business activities, financial affairs, and client transactions.
Compliance with securities legislation in general.
The Staff Notice applies to
CTPs that have or will be applying for registration as a dealer, and
Other registrants that may be considering establishing a CTP as a new business line.
Examples of statements that could be considered false or misleading are included in Appendix A of the Staff Notice.