Canadian Securities Administrators (CSA) is preparing a regulatory framework for crypto-based investment funds. The regulatory document will cover aspects such as custodianship and legal allocation of cryptocurrencies with a fund. The regulatory agency recently talked about making amendments to new public investment funds.
These regulations will set a new precedent for public investment funds activities and impose custodianship requirements. If approved, only alternative and non-redeemable funds will be able to purchase, sell, or reserve cryptocurrencies.
Mutual fund operators will be able to purchase CSA-approved investment funds for digital asset allocation. These assets have to be listed at a recognized trading platform that has regulatory certification by a Canadian regulator. At the same time, the acquired virtual assets have to be fungible.
The local regulators have opened the floor for public to submit feedback regarding public funds with crypto holdings. The digital currencies will be insured and placed in cold storage wallets. A public auditor will publish an annual review report of the stored funds.
Canadian Regulators Add Public Crypto Funds to National Instrument
National Instrument is a regulatory order that is applied uniformly among all provinces and territories in Canada. The regulators have plans to add the regulatory amendments regarding investment funds to national instruments 81-102.
Regulatory requirements for securities are codified in the form of national instruments to make it a standardized law for implementations in all provincial jurisdictions through coordination in accordance with CSA.
Regulators will also assist product development to ensure that appropriate risk mitigation measures are added directly into the regulatory framework. Members of the public may comment on the proposal during the next 90 days after which the government will publish a consultation paper and consideration of overall crypto asset regulatory framework. Canada approved and listed Bitcoin spot ETF since 2021.
Indian Digital Asset Firms Cannot Offer Bitcoin ETFs without Regulatory Clarity
Indian blockchain industry and stakeholders opine that cryptocurrency investors hailing from the region cannot access US-based spot Bitcoin ETFs without necessary regulatory requirements.
The sector denotes that it is a moral victory and brings more credibility to the industry. CoinDCX co-founder and CEO, Sumit Gupta stated that spot Bitcoin ETFs are for US but overall industry will benefit from it. Speaking with Moneycontrol he noted that the spot ETF approval will boost overall crypto sector growth.
At the same time, he highlighted that US-based spot Bitcoin ETFs are not accessible to native investors. The only option is to purchase the investment product via US-based brokerage house but it includes heavy tax deductions.
CoinSwitch Ventures head of investment, Parth Chaturvedi retained that some digital trading platforms have made US spot ETF shares accessible to retail investors in India. However, he retained that Indian investors have to account for tax implications for spot ETF purchases under the Liberalized Remittance Scheme (LRS) that invokes tax collection at source (TCS) that the government recently incremented.
In accordance with LRS, spot Bitcoin ETF purchases exceeding 7 Lakh INR are subjected to 20% TCS deduction. He further stated that the current structure of Bitcoin spot ETFs saves investors from dealing with technical hurdles, custodial issues, and regulatory uncertainty for retail investors.
On the other side, RBI Governor Shaktikanta Das has retained that the position of the Central Bank regarding crypto regulations has remained unchanged.