Canada’s OSC Warns Crypto Exchanges Not to Promote Self-Custodial Wallets: Report

Canada’s OSC Warns Crypto Exchanges Not to Promote Self-Custodial Wallets: Report
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Canada's OSC Warns Crypto Exchanges Not to Promote Self-Custodial Wallets: Report

Tweets from the CEOs of Coinbase and Kraken that advocated self-custody of digital assets are being looked at the by the Royal Canadian Mounted Police for violating the sanctions put in place to curb the trucker protests in the country, according to a report from The Logic.

  • Canadian securities regulator Ontario Securities Commission (OSC) sent the tweets to the police as it believed that the crypto executives were offering advice on how to evade the sanctions on funds, according to the report.
  • Late last week, the Ontario Provincial Police and Royal Canadian Mounted Police ordered all regulated financial institutions, including crypto exchanges, to cease trading and freeze the assets of “designated persons” involved in the trucker protests as well as 34 associated crypto wallets.
  • Shortly after Deputy Prime Minister Chrystia Freeland announced the measure, both Powell and Armstrong tweeted that users should self-custody their crypto on self-custody apps run by their respective exchanges.
  • Self-custody means that the owner of the digital asset holds the private key for the wallet and thus has exclusive access. An appropriate metaphor would be keeping an asset in a safe with only the owner having the combination to the safe, instead of placing it in a bank.
  • In crypto’s earliest days, this was the preferred way to store your digital assets. As digital assets became more mainstream, many investors preferred to hold their crypto on exchanges or with other custodians — many of which are regulated entities with licenses and insurance.
  • PR representatives from Kraken and Coinbase both have said that the exchanges intend to comply with the law, however, both companies have taken a public stance that they believe money should be uncensorable and users should have protection from “unjust” seizure of assets.
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