By CCN: Kraken is not pleased with the way Canadian regulators propose to go about governing crypto trading platforms.

In a sternly written paper to the Canadian Securities Administrators and the Investment Industry Regulatory Organization of Canada, the crypto exchange explained its gripes. The two regulatory bodies have proposed a security law framework that all exchanges would have to abide by whether they like it or not.

In March, the regulator pair released a consultation paper called the “Framework for Crypto-Asset Trading Platforms.” The industry had until May 15 to submit comments about the proposal, CCN reported.

Questions posed by the regulators related to risk mitigation, safeguarding investors’ assets, and market manipulation and deception.

Kraken got to work on its response, delivering on the deadline day in a nine-page document.

Defining Securities

One of the proposed items Kraken takes issue with relates to how the regulators would define securities. In their proposal, regulators state:

“However, securities legislation may still apply to Platforms that offer trading of crypto assets that are commodities because the investor’s contractual right to the crypto asset may constitute a security or derivative.”

Kraken disagrees:

“This premise is faulty with respect to reputable Exchanges…[Most] reputable exchanges operate as custodians or bailees. As such, the assets are legally owned by the customer and not the Exchange operator. This means, critically, that the customer’s interest is not derived from the underlying asset – it IS the underlying asset. The application of a securities law framework, accordingly, is both unnecessary and inappropriate to this structure.”

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