The legal classification of cryptoassets in securities law has been brought into question following a ruling by the Quebec Financial Markets Administrative Tribunal that held that the nature of a crypto and its potential classification as an investment contract may vary depending on the “economic reality” surrounding each transaction, underscoring the need for Canadian and Quebec legislators to modernize the regulatory approach to crypto, according to legal pundits.
The decision, depicted as a game-changer by legal experts, will hearten so-called “finfluencers” or social media financial influencers as it held that offering subscriptions to private groups on social media to receive buy-sell signals for crypto assets does not constitute an investment contract. The ruling also underlines that in cases that are not ex parte, the applicable burden of proof in cases seeking conservatory measures requires conclusive and preponderant evidence, and not prima facie evidence as Quebec’s financial watchdog maintained.