CIRO Imposes Stricter Crypto Custody Rules Following QuadrigaCX Collapse
Canada's Investment Regulatory Organization (CIRO) has unveiled a rigorous new custody framework for crypto trading platforms, responding to the 2019 QuadrigaCX debacle that left $123 million in customer funds unrecoverable. The rules take immediate effect, bypassing legislative delays through membership agreements.
The framework introduces a four-tier custodian ranking system based on capital reserves, insurance coverage, and technical safeguards. Top-tier custodians may hold 100% of client assets, while Tier 4 providers face a 40% cap. Platforms using internal custody solutions are restricted to 20% of holdings—a deliberate constraint to mitigate centralized risk.
CIRO retains authority to dynamically update standards as market risks evolve, signaling proactive oversight in Canada's crypto sector. The MOVE aligns with global regulatory trends tightening asset protection after high-profile exchange failures.
