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Securities Source Newsletter | Canadian Securities Administrators

Securities Source Newsletter | Canadian Securities Administrators

Canadian Securities Administrators (CSA) provide further guidance on the applicability of securities laws to token offerings . . . but is it enough?

By Scott Rozansky and Anoosh Loertscher, Dentons Canada LLP

On June 11, 2018, the Canadian Securities Administrators (CSA) released CSA Staff Notice 46-308 - Securities Law Implications for Offerings of Tokens (Notice), providing guidance on the applicability of securities laws to offerings of coins or tokens, including those referred to as “utility tokens.” A utility token is commonly used to refer to a token that has one or more specific functions, such as allowing its holder to access or purchase services or assets based on blockchain technology. Simply because a token has a “utility function” does not automatically mean its distribution would not be considered to be a distribution of a security. In fact, the Notice suggests that the CSA considers most crypto-coins and tokens to be securities, but does include guidance as to when they might constitute mere utility tokens not subject to securities laws.

The following article will provide a high-level summary of some of the key points from the Notice and conclude with a brief comparison between the CSA position and the SEC position regarding crypto-coins and tokens.
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