The Ontario Securities Commission (OSC), the financial regulator for the Canadian province of Ontario, has begun its investigation into crypto asset trading platform Bibyt for allegedly failing to comply with securities laws.

A warning had previously been issued to crypto asset trading platforms offering trading in derivatives or securities to Ontario citizens on March 29 2021, stating that such firms must contact the OSC or face regulatory action.

The platforms were given until 19 April 2021 to discuss with the OSC the conduct of their operations as a dealer or marketplace into compliance with regulatory requirements. 

Furthermore, the OSC further stated that platforms that allow access to Ontarians are regarded by the regulator as operating in the province for the purposes of securities regulation.

In its Statement of Allegations, OSC states that Bibyt has been operating an unregistered crypto asset trading platform, allowing and encouraging residents of the province to trade crypto asset products that are securities and derivatives.

In addition, the platform has not contacted the OSC with regards ensuring its operations meet the provincial securities standards.

The regulator detailed: “Staff will continue to take action against non-compliant crypto asset trading platforms and are in contact with international securities regulators to exchange information to support enforcement action.

“The OSC thanks the British Virgin Islands Financial Services Commission for their assistance in the Bybit matter.”

A number of unregistered crypto asset trading platforms, including 12 platforms that were added recently, have now been added to the OSC’s Investor Warning List.

As cryptocurrency usage continues to rise, many international regulators are beginning to tighten statutes regarding the emerging currencies, including the Canadian Securities Administrators (CSA) and the Investment Industry Regulatory Organization of Canada (IIROC).

Both organisations recently outlined securities law requirements applying to crypto-asset trading platforms, providing guidance on law requirements with regards to securities, derivatives, contractual rights and claims underlying crypto-assets such as bitcoin.

Increased regulatory oversight of the sector has led to three leading crypto-firms –  Coinbase, Fidelity Investments and Square join to create the Crypto Council for Innovation (CCI), an industry lobbying group.