CIRO Introduces Temporary Tiered Standards for Cryptocurrency Custody in Canada

The Canadian Investment Regulatory Organization (CIRO) introduced temporary standards for cryptocurrency custody on February 3 or 4, 2026 (sources report slightly differing dates), establishing a tiered model for custodians based on factors including asset holdings, capital requirements, insurance coverage, and independent audit obligations. This regulatory measure targets entities under CIRO's oversight that handle cryptocurrency assets, aiming to ensure compliance, risk management, and client asset protection without specifying implementation deadlines.

CIRO functions as Canada's primary self-regulatory organization overseeing investment dealers, mutual fund dealers, and trading activities in financial markets. The standards respond to the increasing integration of cryptocurrencies into mainstream financial services, focusing specifically on custody practices—the safekeeping of client digital assets—distinct from other asset classes.

Under the tiered model, requirements are tailored to the scale and risk profile of custodians, with higher volumes of assets triggering stricter mandates for capital adequacy, insurance protections, and audits. This framework applies to CIRO member firms, including investment dealers and mutual fund dealers dealing in crypto, marking an initial step toward formalizing crypto custody within Canada's regulatory landscape.

The temporary nature suggests potential evolution into permanent rules, amid broader Canadian efforts to address risks like security breaches and operational failures in the crypto sector. No conflicting details on the tiered structure were noted across sources, though one emphasized the specialized focus on custody while the other highlighted standardization.

Expert opinions from Lowenstein Sandler LLP's 'Crypto Brief' (February 5, 2026) describe the rules as a significant step in formalizing oversight for crypto custody operations, timely amid global regulatory scrutiny and reflective of Canada's proactive approach to mitigating digital asset risks.