On February 22, the Canadian Securities Administrators (CSA) published Staff Notice 21-332 – Crypto Asset Trading Platforms: Pre-Registration Undertakings — Changes to Enhance Canadian Investor Protection (SN 21-332). SN 21-332 supplements the CSA’s August 2022 update (the August update), which required unregistered crypto asset trading platforms (CTPs) to provide “pre-registration undertakings” (PRUs), pending review of their applications to become registered dealers. The August update effectively modified the registration framework previously set out in Staff Notice 21-329 – Guidance for Crypto-Asset Trading Platforms: Compliance with Regulatory Requirements (SN 21-329).

CTPs should note that SN 21-332 introduced additional commitments to those the CSA announced in the August update that must be included by CTPs in their PRUs. Accordingly, CTPs that have filed PRUs following the August update are expected to file revised PRUs incorporating the supplemental commitments required by the August update (an enhanced PRU) within 30 days of the publication of SN 21-332.


The CSA has become increasingly concerned with the risks involved in trading in crypto assets due to their highly volatile value and liquidity – particularly in light of recent insolvencies within the industry.

The August update was intended to mitigate a gap in compliance obligations that had been recognized, following the publication of SN 21-329, between CTPs operating in Canada who had completed the registration process, and those seeking to undertake the process. CTPs who had applied to become registered dealers were required to provide PRUs (an initial PRU) to their principal regulators to continue operations while their applications were reviewed. 

This announcement was part of a larger effort by the CSA and the Investment Industry Regulatory Organization of Canada to develop a regulatory framework for trading in crypto assets that balances flexibility, innovation, and investor protection. For additional details on these initial steps and the commitments expected under the initial PRUs, refer to our previous update here.

Additional requirements for PRUs under SN 31-332

The following list summarizes the additional requirements the CSA expects unregistered CTPs to include in their enhanced PRUs:

  • more prescriptive commitments regarding the custody and segregation of crypto assets held on behalf of Canadian clients;
  • restrictions on the ability of the unregistered CTP to pledge, re-hypothecate or otherwise use crypto assets held on behalf of Canadian clients, and a requirement to provide evidence of meaningful compliance systems and corporate governance controls;
  • an expanded prohibition on the unregistered CTP offering margin, credit or other forms of leverage to any client, in connection with trading crypto contracts or crypto assets on its platform;
  • a requirement that the CTP’s global affiliates, parent entities and/or their controlling mind(s) co-sign the PRU and undertake not to interfere with the independence of the Canadian filer’s activities and governance practices, as outlined in SN 21-332;
  • restrictions on the part of the CTP relying on crypto assets, including proprietary tokens issued by the CTP or a CTP affiliate, in determining the CTP’s capital for excess working capital purposes and in determining the CTP’s capital base;
  • commitments in relation to the CTP filing financial information with the CSA in line with obligations set out in section 12.12 of National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations;
  • enhanced commitments on retaining a qualified chief compliance officer (CCO) who must generally meet the requirements of a CCO for a registered exempt market dealer; and
  • a prohibition on the part of the CTP on trades in crypto contracts based on proprietary tokens without the CSA’s prior written consent.

Consequences for failing to file an enhanced PRU

CTPs operating in Canada that fail to file an enhanced PRU, or do not abide by the provisions of the enhanced PRU once filed, may be subject to compliance and enforcement action. This may include:

  • the CTP being named on a CSA investor alert and/or investor warning list;
  • the CTP being directed to implement off-boarding and to impose access restrictions;
  • an order that the CTP and its principals cease trading and/or an order denying exemptions under securities law to the CTP and its principals; and 
  • other penalties or sanctions against the CTP and its principals, as may be determined by Canadian securities regulatory authorities or regulators.


SN 21-332 reflects that implementing regulatory mechanisms to mitigate the risks associated with trading crypto assets remains a CSA priority. CTPs that previously filed an initial PRU should be aware of the additional commitments required by SN 21-332, and should prioritize filing an enhanced PRU within 30 days of February 22, 2023.

Although beyond the scope of this update, for readers interested in the topic, we note the CSA also included some discussion about “stablecoins” beginning on p. 9 of SN 21-332.

The full text of the CSA news update is available here

The authors wish to thank Johanna Vanneste, articling student, for her help in preparing this legal update.

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