Cryptocurrency-trading platforms seeking to register with the Ontario Securities Commission have until June 18 to complete their paperwork, or they’ll face enforcement action, according to documents obtained by The Logic.

The documents reveal a step-by-step process for those platforms that have heeded the regulator’s warnings as it tries to bring the nascent crypto industry into compliance with securities guidelines.

“If you do not respond to requests in a timely manner or comply with the timelines set out below, you may be subject to enforcement action,” the documents read, in boldfaced, underlined type.

On March 29, the OSC, as well as the Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada, issued public warnings and detailed guidance on the steps they believe cryptocurrency-trading platforms need to take to comply with the country’s securities regulations. In an interview with The Logic at the time, CSA chair Louis Morisset said businesses that don’t cooperate can expect to start facing consequences.

The March announcements came one week after The Logic reported there were more than 600 companies offering such services in Canada that had not registered with securities regulators, and at least 11 that hadn’t registered with the Financial Transactions and Reports Analysis Centre of Canada. (Some of the 600-plus may not be required to register, since platforms that give customers immediate possession of their digital assets rather than holding them in custody are exempt.) The number of companies in the sector continues to grow at a rapid pace, with 680 registered as money-service businesses dealing in virtual currencies at publication time, up from 634 at the time of The Logic’s first report in mid-March.

Experts say the explosion in the number of businesses, combined with Canada’s well-known lax enforcement of white-collar crime and fractured securities regulatory regime, is putting investors at risk. Canadian securities regulators asserted jurisdiction over businesses that hold cryptocurrency in custody for clients in January 2020, but so far only one company—Wealthsimple—has completed the process of registering through the CSA’s sandbox program.

In a statement emailed to The Logic Wednesday, OSC spokesperson Kate Ballotta said 36 cryptocurrency-trading platforms have been in touch with the regulator about compliance, although she did not clarify whether that was the number of businesses that have contacted the regulator since March 29 or over all time. CSA spokesperson Ilana Kelemen said “many additional platforms – both local and foreign” have come forward, but said she couldn’t disclose how many.

The OSC gave crypto-trading platforms an initial April 19 deadline to contact it and start the process to register as restricted dealers. Those that did received documents laying out a four-step process: complete a questionnaire within 10 calendar days, wait for the OSC to arrange a meeting, attend the meeting to discuss the process, and apply to register by June 18. The questionnaire asks platforms for basic details on the people running the business, the assets held under management for Canadian and foreign clients and procedures for custody, insurance and security.

Asked what would happen to platforms that didn’t get in touch by the April 19 deadline, Ballotta referred The Logic to the OSC’s original release on the subject, with its warning that “if a platform currently trading in derivatives or securities in Ontario does not do so by this date, steps will be taken to enforce applicable requirements under securities law.”

The CSA expects both Canadian cryptocurrency-trading platforms and those headquartered outside Canada, but doing business with Canadian customers, to comply with its requirements to register as securities dealers. The Logic reached out to the major international exchanges Coinbase, Gemini, Kraken and Binance to ask if they had been in touch with Canadian regulators by the OSC’s April 19 deadline, with only Binance responding by publication time.

“As you can understand, we do not comment, as a matter of policy, on communications with any regulators,” said Binance spokesperson Hazel Watts. “What we can say is that we take a collaborative approach in working with regulators around the world and we take our compliance obligations very seriously.”

The world’s largest cryptocurrency exchange, Binance is one of the 11 foreign businesses identified by The Logic as operating in Canada without registering with either FINTRAC or securities regulators. Bloomberg reported last month the U.S. Commodity Futures Trading Commission is investigating Binance to determine whether it allowed Americans to buy and sell derivatives without registration.

Adam Cai, chief executive of the Canadian cryptocurrency-trading platform VirgoCX, said the process of getting registered is time-consuming and resource-intensive, but hopefully worth it in the long run. Cai said VirgoCX submitted a proposal to the OSC last year, and is currently preparing its application form, hoping to eventually register as a broker-dealer with the IIROC.

“It’s a lot of work to get everything fully ready … but I think this is very good momentum for us,” Cai said. “Once we get everything registered, that also potentially means we can open more doors to institutional investors. That can grow our business significantly.”

Mitchell Demeter, president of the Canadian cryptocurrency-trading platform Netcoins, said he believes regulators are doing their best to balance investor protection and allowing an innovative new industry to succeed. Demeter said Netcoins submitted an application for a restricted-dealer licence at the end of September and has been working with the British Columbia Securities Commission for two and a half years.

“There’s always going to be critique, especially if people feel the pressure and the stress of trying to become compliant and check all the boxes, but it’s a complex thing,” he said. “In the big picture, it’s going to make it safer for investors and Canadian consumers.”