Canadian securities regulator adds Bybit to purge of unregistered crypto exchanges

On June 21, the Ontario Securities Commission began proceedings against Bybit Fintech Limited. 

The commission alleges that Bybit failed to respond to public statements requiring crypto exchanges to begin compliance talks with the regulators. 

The OSC action is just the latest in a series of enforcements from the regulator against custodial crypto exchanges operating in the country. As with similar actions against Poloniex and Kucoin, the commission is operating on an interpretation of securities law that identifies custodied crypto as its own form of securities contract, despite underlying assets like Bitcoin and Ether remaining commodities. 

The allegations against Bybit explain:

“While Bybit purports to facilitate trading of the crypto assets in its investors’ accounts, in practice, Bybit only provides its investors with instruments or contracts involving crypto assets. These instruments or contracts constitute securities and derivatives.”

The first hearing on the Bybit case is scheduled for July 15. 

As the OSC’s first case in this wave of enforcement — against Poloniex — only had its first hearing on Friday, the success of its argument remains to be seen. 

Alongside these enforcements, the commission has added 12 crypto trading platforms to its investor alert list since September.