In depth
In its 22 October 2025 notice, the CSA emphasized that crypto-backed lending platforms (“Platforms”) may be subject to securities legislation and encouraged such Platforms to comply with applicable regulatory requirements, including securities registration requirements, or seek exemptive relief.
According to the CSA, crypto-backed loans typically involve borrowers pledging their digital assets to lenders (i.e., the Platforms) as collateral, which often involves a user pledging an amount exceeding the loan value. The CSA has taken the position that, depending on the circumstances, such an arrangement may involve the trading and/or distribution of securities by the Platforms, which would require securities registration or the filing of a prospectus.
The CSA noted that it has been actively working with Platforms that are seeking to offer such services and, in some cases, have granted tailored exemptive relief where appropriate, including by imposing conditions intended to address investor protection. The CSA also noted that Platforms that trigger securities law requirements and operate without registration or exemptive relief may expose investors to significant potential harm, including due to inadequate asset safeguards and limited transparency around loan terms, and a lack of internal controls to safeguard the collateral.
The CSA is urging both Platforms and investors to do their due diligence. According to the CSA, Platforms should proactively consult with regulators through the CSA Financial Innovation Hub or jurisdictional innovation hubs to clarify their compliance obligations. The CSA provided a list of crypto-lending platforms that obtained exemptive relief. We note that, recently, APX Inc. (operating as APX Lending) became the first crypto-backed lender in Canada to receive exemptive relief. Investors, meanwhile, are encouraged by the CSA to verify whether a Platform is registered or operating under exemptive relief before engaging in any crypto-backed lending.
Working with professionals who are knowledgeable in innovative products and services that use blockchain technology can help Platform developers and operators understand their obligations under Canadian laws. If you have any questions or would like guidance on navigating securities law in the context of crypto-based lending, please don’t hesitate to reach out to us.
