tl;dr
Canada has removed digital asset funds from reduced margin eligibility, impacting trading and liquidity. The country has been tightening its digital asset regulations, including adopting the OECD crypto-asset reporting framework and implementing new guidelines for exchanges. Meanwhile, the President...
Canada Removes Digital Asset Funds from Reduced Margin Eligibility Canada has removed digital asset funds from reduced margin eligibility, impacting trading and liquidity. The country has been tightening its digital asset regulations, including adopting the OECD crypto-asset reporting framework and implementing new guidelines for exchanges.
Meanwhile, the President of the Czech Republic has signed a law exempting taxes for residents holding digital assets for at least three years. Additionally, the governor of the Czech National Bank has proposed a national strategic BTC reserve.
Digital asset funds are no longer eligible for reduced margin exemptions in Canada under the country’s latest quarterly list. The Canadian Investment Regulatory Organization recently updated the List of Securities Eligible for Reduced Margin (LSERM), with digital asset funds the notable exclusion.
In Canada, the LSERM lists securities that regulators allow a reduced margin rate of 25% for inventory positions and 30% for client positions. Updated quarterly, the list only accepts securities listed on the Toronto Stock Exchange and its sister company Venture Exchange (TSXV), Cboe Canada and the Canadian Securities Exchange.
Eligibility criteria include a price volatility margin lower than 25%, over $70 million in public float and over $750,000 in daily trading volume in a given quarter. The security must also be listed on a Canadian exchange for at least six months. While digital assets meet all the other criteria, their volatility was deemed excessive for the LSERM.
Digital assets’ delisting will impact trading in Canada as investors have a smaller pool of funds to borrow from for margin trading, translating into higher upfront capital to trade. In turn, this leads to lower liquidity and a higher likelihood of big trades causing price swings.
Like many other major economies, Canada has been paying closer attention to digital assets over the past few years and tightening its regulations to curb crime and protect investors. Last October, the country adopted the OECD crypto-asset reporting framework, which will take full effect in 2026, boosting tax transparency and cross-border cooperation with dozens of other countries, including all EU member states, Australia, New Zealand, Mexico, and South Africa.
The biggest shift came on December 31 when new guidelines from the Canadian Securities Administrators took effect. They include a requirement for daily reports by exchanges, stricter leverage and custody requirements and a new license to offer stablecoins. The new rules led to an exodus by VASPs from Canada, with notable exits including Winklevoss-owned Gemini, Binance, OKX, Paxos and Bybit.
Elsewhere, the President of the Czech Republic, Petr Pavel, has signed a new law that exempts taxes from residents who have held their digital assets for at least three years. The new law was passed by the country’s lawmakers in December as part of the country’s implementation of the EU’s Markets in Crypto Assets (MiCA) framework.
In addition to the three-year exemption, the law excludes Czechs from reporting their transaction when filing taxes if the total sum is below 100,000 koruna (roughly $4,150) annually.
The new law comes days after the governor of the Czech National Bank, Aleš Michl, proposed a national strategic BTC reserve, similar to Trump’s initiative in the U.S. Michl wants the bank to invest up to 5% of its €140 billion ($143.3 billion) in the digital asset, joining Brazil, Poland, Russia and Germany in the push to align with Trump.