Canada’s OSC Approves Pilot on Secondary-Market Trading of Security Tokens

Wilfred Michael 

Wilfred Michael

News reporter

24 October 2019,
Canada’s OSC Approves Pilot on Secondary-Market Trading of Security Tokens

The Ontario Securities Commission (OSC) has cleared TokenGX, a tokenization startup in Canada, to pilot secondary-market trading of its security tokens for a limited period.

Per a decision published Tuesday, TokenGX, which is currently participating in a regulatory sandbox program set up by the OSC, has been cleared to create a blockchain-based security token trading platform for the trading among investors.

The tokens to be traded by investors on the Ethereum-based platform by TokenGX will be the FNDR tokens, which the startup used to raise funds under an exemption rule in Canada back in 2017.

Receiving approval now opens the room for approved investors, which include only authorized residents of Ontario, to trade the tokens, thus increasing liquidity and transferability. The OSC believes that introducing these new features is essential for investors to access their funds, and for TokenGX to monitor the development or growth stage of their business.

Liquidity is limited for offerings of tokens under a prospectus exemption as the tokens issued are subject to resale restrictions,

The OSC announcement noted.

Another section clarified that the exemption which TokenGX received to pilot the secondary-market trading of its token should not be considered as a precedent for other companies seeking to go down the path.

Instead, the decision was referred to as one based on the unique facts and circumstances of the TokenGX, and for the limited purpose of allowing the startup to test its business in a limited commercial setting.

Before the approval, TokenGX reportedly submitted its business model and subsequently applied to the OSC as the principal regulator to be exempted from specific requirements under applicable securities legislation.

Meanwhile, in a converse development which took place in July, reported that the OSC settled charges with CoinLaunch for $39,500, over the company’s failure to register with the regulator.


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