Canada Introduces Tiered Crypto Custody Framework Ahead of Permanent Regulations
Canada's Investment Regulatory Organization (CIRO) has unveiled an interim custody framework for crypto assets, marking a significant step toward formalizing oversight of digital asset holdings. The rules establish a tiered custodian model with escalating requirements based on the proportion of client assets held.
Dealer members must store crypto either with CIRO itself, approved third-party custodians, or through internal arrangements meeting strict capital, insurance, and cybersecurity standards. Tier 1 and Tier 2 custodians—permitted to hold 100% of client assets—face heightened capital thresholds and mandatory external security audits.
The framework operates through binding member terms rather than permanent rulebook changes, granting CIRO flexibility to adapt to emerging risks. This provisional structure bridges the gap until Canada finalizes comprehensive crypto regulations, currently under development.
