The Canadian Investment Regulatory Organization (CIRO) has introduced an interim regulatory framework for cryptocurrency and tokenized asset custody. The tiered model sets capital, insurance, and cybersecurity standards for dealers and custodians. This interim step aims to protect investors while comprehensive, permanent crypto regulations are developed in Canada.
The Canadian Investment Regulatory Organization (CIRO) has decided on an interim framework for crypto and tokenized asset custody. Its purpose is to provide investor protection and regulatory clarity while permanent rules are crafted.
Dealer members must safeguard client holdings with CIRO, approved custodians, or internal arrangements meeting baseline standards. The framework introduces a tiered custodian model linking requirements to the proportion of client assets held.
Tier 1 and Tier 2 custodians can hold up to 100% of a dealer’s crypto assets. They must, however, comply with higher capital thresholds and enhanced assurance standards like external cybersecurity reviews.
The framework operates by setting binding terms and conditions for members, not by altering the core rulebook. This approach grants CIRO flexibility to address emerging risks without permanent rule changes.
The model also establishes minimum capital requirements that vary based on a custodian’s risk assessment. Foreign companies face higher requirements to account for cross-border enforcement and insolvency risks.
This development illustrates Canada’s measured, step-by-step approach to supervising the crypto market. The CIRO framework provides a temporary roadmap ensuring investor safeguards.
