In an article published in The Hill Times (available to subscribers), Natasha MacParland and Robin Schwill say insolvencies in the crypto sector raise issues already seen in cannabis bankruptcies.

Natasha and Robin note they are looking for the federal government to modernize Canada’s insolvency statutes to keep up with new kinds of digital assets. From an insolvency perspective, they say, the cannabis sector, another nascent industry filled with startups, is a better comparison than Lehman Brothers.

“What we take from the cannabis chaos, for lack of a better word, is that we identified early on that the regulations in place didn’t contemplate distress and insolvency,” Natasha says. “That meant a lack of clarity about what would happen with licenses, security clearances, and other key assets if a cannabis company had to file for insolvency.”

She adds that “what makes a difference for us is a clear, fair, reasonable set of rules, pre-established,” that make it clear how an insolvent crypto exchange or crypto securities firm should be administered, and who gets what back.

What could the collapse of a cryptocurrency exchange look like in the Canadian context? Read the latest issue of Davies Insolvency Now.