Registered Canadian cryptocurrency-trading platforms have a message for their customers: You’re safe with us. As fears mount that the collapse of FTX will spread contagion to the rest of the crypto market and crypto-trading platforms around the world scramble to prove the health of their reserves, the Canadian sector sought to reassure clients. Here’s how it’s unfolding:

Every little thing is going to be alright: Netcoins, Coinsquare and WonderFi, owner of the crypto-trading platforms Bitbuy and Coinberry, all posted tweets in the past two days aimed at reassuring customers of their solvency and the safety of customer funds. The tweets all contained reference to Canada’s unique regulatory regime for cryptocurrency-trading platforms. 

Registered platforms in Canada must get insurance, keep client assets with third-party custodians and send audited financial statements to regulators, unlike many of their competitors in the rest of the world who face significantly less oversight. Fraser Matthews, president of B.C.-based Netcoins, told The Logic the lending, leverage and margin activities that may have gotten some platforms into trouble are prohibited among registered Canadian firms. “Netcoins has no lending products. At no point is it able to or allowed to lend out anything on its balance sheet,” he said. 

Well, maybe not every little thing: While Canada’s regulations mean there are fewer concerns about registered platforms being solvent, or trading and lending out customer funds that should have been kept in reserve, the value of the crypto assets Canadians hold on those platforms may take a hit. Over the summer, the collapse of the stablecoin TerraUSD led to bankruptcies and a widespread crash in crypto prices from which the sector still hasn’t recovered. 

Market watchers are concerned the collapse of FTX and its sister firm Alameda could lead to something similar or worse. “It’s not a good look on the industry,” said Eric Richmond, COO of Coinsquare, the first crypto platform to be registered by the Investment Industry Regulatory Organization of Canada as well as provincial securities regulators. “But I think Canadian customers can feel that they are protected because we have this clear regulatory framework now in Canada.”

Regulators set their sights wider: The Ontario Securities Commission (OSC) and the Canadian Securities Administrators did not respond to interview requests before publication. However, at the GRI Summit 2022 Wednesday morning, OSC CEO Grant Vingoe said the collapse of FTX ​​“highlighted the need for regulation on a collaborative basis, globally,” according to the Financial Post. All cryptocurrency platforms with Canadian customers, including major international ones like FTX and Binance, are supposed to enter into undertakings to continue to operate in the country while they seek registration, but to date, only Canadian platforms and Singapore-based Crypto.com have done so. The sector is “really challenging to regulate,” Vingoe said.