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Canada introduced a new framework governing crypto custody standards
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Custodians are classified into four tiers with asset holding limits
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The rules aim to prevent failures like the QuadrigaCX collapse
New Custody Framework Introduced
Canada’s investment industry regulator, Canadian Investment Regulatory Organization, published a new Digital Asset Custody Framework targeting crypto trading platforms and custodians.
The rules are being enforced through membership conditions while permanent regulations are developed.
Tiered Custodian Structure
Custodians are divided into four tiers based on capital strength, regulatory oversight, insurance coverage, and operational resilience. Top-tier custodians may hold up to 100% of client assets, while lower tiers face stricter limits.
Internal custody by trading platforms is capped at 20% of client crypto holdings.
Stronger Oversight and Investor Protection
The framework mandates enhanced governance controls, cybersecurity standards, insurance coverage, audits, and clear liability provisions. The regulator cited lessons from the 2019 QuadrigaCX collapse, which resulted in significant retail losses.
The move is intended to balance investor protection with innovation as Canada’s crypto market matures.
