The Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC) have issued new advertising guidelines to crypto trading platforms.
In a document published last Thursday (September 23), the watchdogs explained that crypto platforms must ensure that ads and marketing materials are not “false or misleading”, while the use of “gambling-style” contests, promotions and bonuses were discouraged.
The notice concerns all companies that plan on operating in or targeting Canada as one of their main jurisdictions. Some of those companies may be already registered while others may just be getting started.
Securities and commodities that relate to crypto are likely to both be subject to these regulations, with a few final details still to be elaborated upon.
In the official statement, the watchdogs explained: “We have recently noted some [companies] using advertising or marketing strategies that include contests, promotions, bonuses and time limits to encourage investors to engage in trading and to act quickly for fear of missing out on an investment opportunity or a reward.”
Bonusing schemes were discouraged by the regulators as they prompt action that may be motivated by a fear of missing out. For example, some platforms may urge customers to act within a specific timeframe or be the first several hundred to complete an action.
Misleading messages that a platform has been registered under a securities law are also prohibited. Social media messages will be within the remit of regulators and crypto trading platforms should be prepared to uphold the highest standards of consumer protection regardless of the medium, the IIROC and CSA said in their joint-statement.