OSC on Bitcoin: We'll Take Action if Ontario Securities Act is Violated

The Ontario Securities Commission has weighed into virtual currency, warning investors about its risks and "uncertain future".

The document starts out by warning investors about the uncertainty about what virtual currency actual is: money, an investment or something else. Thus, there is little guidance on what kind of protection is available should "something go wrong", as in the event of a failed exchange.

What is certain, however, is that an investor is taking huge risks by getting involved with it. Because it is (generally) not accepted as a legal form of payment for goods or services, its value is highly unpredictable and volatile. There are also software glitches, hackings, failed exchanges, fraud and other illegal activity.

Special mention is made on how investors can be lured into entering early for what eventually turns out to be a Ponzi scheme, something which is likely true for a large number of Altcoins Altcoins Altcoin is a term that describes any cryptocurrency that isn’t Bitcoin. Since Bitcoin’s inception, countless cryptos have been launched. Many of these have met varying levels of success, though few have risen to rival Bitcoin itself.Ether, XRP, Stellar, Monero, Ada, and Dash are a few examples of the more popular altcoins. There are currently over 5,000 altcoins and this number seems to grow constantly. The leading altcoins as of May 2020 are Ethereum and Ripple.In terms of structure, altcoins c Altcoin is a term that describes any cryptocurrency that isn’t Bitcoin. Since Bitcoin’s inception, countless cryptos have been launched. Many of these have met varying levels of success, though few have risen to rival Bitcoin itself.Ether, XRP, Stellar, Monero, Ada, and Dash are a few examples of the more popular altcoins. There are currently over 5,000 altcoins and this number seems to grow constantly. The leading altcoins as of May 2020 are Ethereum and Ripple.In terms of structure, altcoins c Read this Term:

"Fraudsters have latched onto virtual currency as a way to show they’re on the cutting edge and to entice unsuspecting investors to get in “on the ground floor,” a tried-and-true technique. Some have already set up Ponzi and other illegal schemes using virtual currency to lure investors."

Crypto fans will view the document as overweight on the negative side. Unlike many of OSC's counterparts, such as the various financial governing bodies in the U.S., they do not mention any of cryptocurrency's potential benefits, even in passing or for the sake of comparison. Neither is consideration given for potential Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term and normalization as some form of security in the future.

Under a section titled "Report It", the document warns further:

"The OSC is closely monitoring investment activity related to virtual currency and we’ll take action where violations of the Ontario Securities Act are concerned."

While the warnings to investors are certainly in order, one can speculate as to the exact intention behind this final statement. The same document earlier expressed uncertainty over how virtual currency should be classified in terms of money or investments. If it is not legally a security, then how can its misuse violate the securities act? Perhaps the overarching goal was to reassure investors, or a hint that they'll do so as part of some future oversight.