Crypto enthusiasts in Canada are giving regulators their ideas about how to monitor the space. This will include the practice of short-selling.
The Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada filed a joint consultation paper last week called the Proposed Framework for Crypto-Asset Trading Platforms.
Short-selling bitcoin and other cryptos has been steeped in controversy, though many say it was needed. That was back when it seemed like cryptocurrencies’ prices had room to run for years. Now, in the wake of the historic downturn, short-selling is back on the table.
Sometimes, crypto enthusiasts know enough to teach even top experts a thing or two about virtual coins. | Source: Shutterstock
As CCN explained in 2013 about trading, a bet that a security’s price will fall is called a “short.” This is the opposite of a “long,” which is buying something in the expectation of a future price rise.
Here’s the language from Canada’s paper about short-selling:
To reduce the risks of potentially manipulative or deceptive activities, in the near term, we propose that platforms not permit dark trading or short-selling activities, or extend margin to their participants. We may revisit this once we have a better understanding of the risks introduced to the market by the trading of crypto assets.