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Crypto Regulation Update: New US and Canadian Rules for Digital Assets

Crypto Regulation Update: New US and Canadian Rules for Digital Assets

ATN BREAKING NEWS |

Crypto Regulation Update: New US and Canadian Rules for Digital Assets

October 21, 2026 | ATN Trade & Finance

The regulatory landscape for digital assets shifted materially in the past two months, with the SEC, CFTC, and two Canadian regulators each publishing substantive new frameworks. The common thread: the informal period of enforcement-first crypto regulation is giving way to formal rulemaking with specific capital requirements, custody obligations, and offering structures.

SEC "Regulation Crypto Assets" — Comment Period Just Closed

On August 21, 2026, the SEC published a 146-page proposed rulemaking — formally titled "Regulation Crypto Assets" (File No. S7-2026-27, 91 Fed. Reg. 54510) — creating a dedicated offering framework for "covered investment contracts" involving crypto assets. The comment deadline was October 20, one day ago.

The proposal creates two exemption tiers for token issuers. A startup exemption allows up to $5 million raised over four years, with Form NOR disclosure filings. A fundraising exemption modeled on Regulation A allows Tier 1 issuers to raise up to $20 million in 12 months and Tier 2 issuers up to $75 million (Tier 2 requires audited financials and Form 1-CRYPTO filings). The proposal includes principles-based disclosure requirements covering token supply, governance, and cybersecurity, as well as a safe harbor (Rule 400) providing a non-exclusive path for issuers to demonstrate that an investment contract has ended once essential managerial efforts are complete. Importantly, the rules apply to investment contracts involving crypto assets — not to crypto assets broadly — meaning issuers remain subject to anti-fraud and anti-manipulation provisions regardless.

SEC Crypto Custody Rules — 60-Day Comment Window

On October 1, 2026, the SEC proposed a companion rule (Release Nos. IA-7023; IC-36353) creating a formal custody framework for crypto assets held by registered investment advisers (RIAs) and regulated funds. Comments are due 60 days after Federal Register publication.

The proposal allows advisers to self-custody crypto assets that no permitted custodian will hold, but only with written documentation updated at least quarterly, dual approval for transfers by two designated personnel including a senior manager, client-level blockchain address segregation, annual cybersecurity assessments, and an independent SOC 1 Type 2 internal control report. State trust companies meeting specified diligence and segregation conditions would qualify as permitted custodians for both advisers and regulated funds. The SEC did not propose a general DeFi custody exception but posed questions on DeFi in its more than 300 comment requests.

CFTC Regulation CTX and Regulation CAM — Retail Crypto Trading

On October 5, 2026, the CFTC issued an advance notice of proposed rulemaking (ANPRM) for two new frameworks covering retail commodity transactions in leveraged or margined crypto assets. Regulation CTX would define when a leveraged retail crypto transaction is a "covered transaction" under CEA section 2(c)(2)(D), including provisions on what constitutes "actual delivery" — onchain transactions that give the customer possession and control would generally fall outside the regime. Regulation CAM would create a new subcategory of designated contract market (DCM) specifically for platforms trading these covered transactions, with obligations around surveillance, position limits, recordkeeping, and proof-of-reserves. All covered transactions would be intermediated by futures commission merchants, and the CFTC's preliminary view is that federal rules would displace state laws for trading facilities offering covered transactions, while spot-only exchanges could remain under state law.

Canada: CIRO Custody Framework and OSFI Capital Succession

In Canada, two regulators moved on separate fronts. The Canadian Investment Regulatory Organization (CIRO) published its Digital Asset Custody Framework on February 3, 2026, effective immediately, setting tiered, risk-based custody expectations for Dealer Members operating crypto-asset trading platforms — covering crypto assets, tokenized assets, and stablecoins. The framework tightens how client assets are held with third-party custodians and was listed as a 2026 CIRO regulatory priority.

On the banking side, OSFI's capital and liquidity guideline for crypto-asset exposures — which has been in force since late 2025 — is now being superseded by its 2027 successor, which takes effect November 1, 2026 for institutions with October 31 fiscal year-ends and January 1, 2027 for December year-ends. The framework classifies crypto assets into four groups (1a tokenized traditional assets, 1b stablecoins, 2a hedging-eligible assets meeting size/liquidity thresholds, and 2b all others) with increasingly conservative capital treatment. Group 2 exposures are capped at 5% of Net Tier 1 capital; Group 2b positions require a full CET1 capital deduction. Stablecoins must redeem within five calendar days and publish daily value disclosures.

What this means: The US is entering a period of parallel rulemaking — the SEC constructing offering and custody frameworks while the CFTC builds out trading infrastructure rules — and the two agencies are not yet fully coordinated on where securities regulation ends and commodity regulation begins. For Canadian financial institutions, the transition to the 2027 OSFI guideline this November is operational, not theoretical: any bank or trust company with crypto-asset exposure needs to confirm its Group classification and verify the 5% Net Tier 1 cap is being tracked. For digital asset businesses on either side of the border, the window for influencing these rules through comment is closing fast.

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