Crypto asset trading platforms
Crypto asset trading platforms (CTPs) are online applications or systems that bring together buyers and sellers of crypto assets to facilitate transactions or trades.
Some CTPs provide a platform for users to buy and sell crypto assets and receive immediate delivery of these assets into their own digital wallets while some CTPs retain custody of the crypto assets in storage controlled by the CTP.
Depending on the model of the CTP, securities laws may apply, and the CTP may need to be registered or recognized by the appropriate securities regulator(s). It’s important to know what the requirements are so you can do your homework before you sign up to use any trading platform, including checking if the platform is registered.
Initial Coin Offerings or Initial Token Offering
Security tokens are sold or auctioned in an Initial Coin Offering (ICO) or an Initial Token Offering (ITO). These “Token Generating Events” are used to raise funds for an idea or a business model. The token likely has no value at the time you buy it but may be exchangeable in the future if the project is successful. Because there are no guarantees or certainty that the token will have any future value or that the project will succeed, you should be cautious when buying into an ICO. Recognize that the level of disclosure and information that will be available to you is typically far less than for a typical investment opportunity, and you could lose some, or all, of your original investment.
Depending on the circumstances of the ICO, the tokens may be securities. If they are, then they may be subject to securities law. If you’re uncertain if securities laws apply to the ICO or the tokens you’re considering, contact your local securities regulator.
Review the Regulation of Crypto Assets page to learn more about when securities regulation may apply to buying and selling crypto assets, and how regulation helps protect you.