The Canadian Investment Regulatory Organization (CIRO) has published a temporary framework for the custody of crypto and tokenized assets. This framework sets protection standards for customer assets of dealer members operating crypto trading platforms; it covers custody limits, segregation rules, reporting obligations, and tiered requirements for third-party crypto custodians. The framework is binding through membership conditions, providing investor protection and regulatory clarity while permanent rules are being developed. This is a significant development in the Canadian market, especially for investors conducting detailed BTC analysis.
How Does the CIRO Crypto Custody Framework Affect BTC Investors?
Under the framework, dealer members must hold crypto assets in CIRO-approved digital asset custodians or comply with basic standards through internal custody arrangements. This enhances the security of customer funds on BTC futures platforms. Segregation rules mandate the complete separation of customer assets from company funds, minimizing bankruptcy risks.
Tiered Custody Model and BTC Limits
A tiered custody model has been introduced: Tier 1 and Tier 2 custodians can hold up to %100, while Tier 3 is limited to %75, Tier 4 to %40; internal custody is capped at %20. These tiers are determined based on the custodians’ audit quality, insurance coverage, and operational maturity. For high-volume assets like BTC, Tier 1/2 may become mandatory.
| Tier | Maximum Custody Ratio | Example Requirements |
|---|---|---|
| Tier 1/2 | %100 | CIRO approval, full insurance |
| Tier 3 | %75 | Partial audit |
| Tier 4 | %40 | Basic standards |
| Internal Custody | %20 | Limited use |
Capital Requirements for BTC Custodians
Custodian capital requirements. Source: CIROThere are minimum capital requirements scaled according to risk and jurisdiction, higher for foreign companies. For example, additional collateral is required for non-Canadian custodians. This shapes platform competition by increasing BTC custody costs.
Auditing, Monitoring, and Reporting for BTC Security
Auditing is conducted with continuous monitoring and reporting. Monthly reports cover asset movements and compliance. Independent auditors prevent BTC losses by verifying cold wallets. This process draws lessons from past scandals like QuadrigaCX.
Impact of Canadian Regulations on the BTC Market
This step follows CIRO’s previous risk-based measures; for example, on February 6, 2025, crypto funds were removed from the reduced margin scope. Canada continues its cautious approach to crypto regulations. Canadian exchanges become safer for BTC investors, while global compliance pressure increases.
Future Impacts of the CIRO Framework on BTC
The temporary framework paves the way for permanent rules. Canadian volumes in BTC spot and futures markets may increase, but non-compliant platforms will be eliminated. Investors should prefer CIRO-approved custodians to reduce risks.
Source: https://en.coinotag.com/ciro-crypto-custody-framework-btc-protection-standards



