On July 24, 2019, the Ontario Securities Commission (the “OSC”) approved a settlement agreement with CoinLaunch Corp. (“CoinLaunch”), a provider of various ICO-related services in the crypto industry. Following an investigation by the OSC, it was determined that CoinLaunch engaged in and held itself out as engaging in the business of

On June 28, 2018, the Investor Office of the Ontario Securities Commission (OSC) published a report entitled “Taking Caution: Financial Consumers and the Cryptoasset Sector”. The report summarizes the results of a survey, conducted in March 2018, of more than 2,500 Ontarians aged 18 and older.

Cryptoasset Ownership

The report describes that 5% of Ontarians currently own cryptoassets (or, as the survey referenced, cyrptocurrencies). This translates into approximately 500,000 Ontarians. Furthermore, an additional 4% of Ontarians in the age bracket owned cryptoassets in the past but no longer do.

Of particular note was the report’s determination that men aged 18-34 are more likely to own a cryptoasset in comparison to any other demographic. However, of those surveyed, only half have invested approximately $1,000 and only 9% invested more than $10,000, primarily in Bitcoin and Ether.


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The British Columbia Securities Commission (BCSC) published BC Notice 2018/01 – Consulting on the Securities Law Framework for Fintech Regulation on February 14, 2018.  The Notice follows from a series of consultations (both in person and by survey) conducted by the BCSC on various elements of the financial technology (fintech) industry.  The Notice sets out the results of the consultations, the general approach to date of the BCSC on certain of the matters and poses specific questions for comment on potential regulatory action to clarify or modernize securities laws in the space. Written submissions are due on April 3, 2018.

The Notice discussed the following topics, among others:

  • crowdfunding and online lending business models
  • online adviser business model
  • cryptocurrency funds
  • initial coin offerings (ICOs) and cryptocurrencies.


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In August 2017, we considered the guidance offered by the Canadian Securities Administrators (CSA) regarding the application of securities laws to the blockchain industry and initial coin offerings (ICOs), primarily as set out in CSA Staff Notice 46-307 Cryptocurrency Offerings.  In that post, we noted that the CSA have provided little guidance regarding when they would consider cryptocurrencies to be securities, and thus subject to Canadian securities rules.

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On August 24, 2017, the staff of the Canadian Securities Administrators other than Saskatchewan (CSA) published CSA Staff Notice 46-307 Cryptocurrency Offerings (the Staff Notice) in response to increased activity within the distributed ledger technology or “blockchain” industry. The Staff Notice provides guidance regarding the application of Canadian securities laws to businesses operating in that industry, in particular those undertaking initial “coin” or “token” offerings (ICOs), exchanges on which those coins, tokens and cryptocurrencies are traded and investment funds that invest in such assets.

The Staff Notice provides that in the CSA’s view many coins, tokens and cryptocurrencies fall within the definition of “securities” under Canadian securities laws. An offering of such tokens would therefore require a prospectus or exemption from prospectus requirements and businesses supporting and operating ancillary to such tokens could be subject to registration requirements. The Staff Notice also provides that such products may also be derivatives and subject to the derivatives laws adopted by the Canadian securities regulatory authorities.

The Staff Notice confirms speculation among industry participants and advisors that Canadian regulators would take this approach, which is similar to the positions articulated by the United States Securities & Exchange Commission and securities regulators in Singapore.

With respect to ICOs, the Staff Notice provides that, from the CSA’s perspective, many of the ICOs completed to date involved the sale of securities and that securities laws in Canada will apply if the person or company selling the securities is conducting business from within Canada or there are Canadian investors in the tokens.

The CSA are aware of businesses marketing their tokens as software products and taking the position that the tokens are not subject to securities laws.  It appears to be the CSA’s view, however, that in many cases, when the totality of the offering or arrangement is considered, the tokens should properly be considered securities.  In assessing whether or not securities laws apply, the Staff Notice states that the CSA will consider substance over form and apply a purposive interpretation to the law with the objective of investor protection in mind.


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On July 25, 2017, the United States Securities and Exchange Commission (SEC) issued a report of investigation (Report) concluding that the digital currency “tokens” sold by DAO (DAO Tokens) in a 2016 initial coin offering (ICO) are securities for purposes of federal United States securities laws. This conclusion could have far-reaching implications for businesses that have completed or are contemplating an ICO, businesses dealing with tokens or cryptocurrencies, such as cryptocurrency exchanges, as well as the still-developing legal landscape relating to ICOs and distributed ledger or “blockchain” technology.

Beginning in 2013, many entities that use blockchain technology as their operational foundation have raised funds through ICOs. While precise data is not available, various sources estimate that since the beginning of 2016, between 84 and 139 ICOs have been completed, raising gross proceeds of between U.S.$281 million and U.S.$1.35 billion.(1) In some cases, ICOs have sold out in a matter of seconds, such as the Basic Attention Token ICO in May 2017 which raised U.S.$35 million in less than 30 seconds.(2)

Pursuant to an ICO, an entity offers digital currency tokens to purchasers, typically in exchange for digital consideration such as Bitcoin or Ether. The rights attaching to these tokens vary greatly, with some resembling “kick-starter” style crowd-funding in that token holders have pre-paid for goods or services offered by the entity and others resembling common shares in a company in that token holders have certain voting rights and certain rights to dividend-like payments from the entity.


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