Canadian Investment Regulatory Organisation has formalised an interim framework governing the custody of crypto and tokenised assets, setting supervisory expectations while permanent rules remain under development.
The framework applies to investment dealers operating crypto trading platforms and outlines custody limits, segregation standards, reporting obligations and tiered requirements for third-party crypto custodians.
“We expect that, over time, elements of this framework may inform the development of permanent rules or harmonised regulatory instruments as crypto asset markets mature,”
CIRO said.
Under the model, dealers must hold client crypto either with CIRO-approved custodians or through internal custody arrangements that meet baseline standards.
Tier 1 and Tier 2 custodians may hold up to 100% of a dealer’s crypto assets subject to higher capital, insurance and assurance requirements, while Tier 3 and Tier 4 custodians are capped at 75% and 40% respectively.
Internal custody by dealers is limited to 20% of client crypto holdings, with minimum capital requirements for custodians scaling by risk and jurisdiction, including higher thresholds for foreign firms.
The framework builds on earlier CIRO measures, including the exclusion of crypto funds from reduced margin eligibility, and aligns with Canada’s cautious approach to crypto oversight as broader regulation continues to take shape.