The Canadian Investment Regulatory Organization (CIRO) has determined that cryptocurrency funds will not qualify for reduced margin eligibility, due to concerns over their volatility, liquidity risks, and regulatory uncertainty. As a result, traders of crypto funds will have to maintain higher collateral, thereby making leveraged trading more costly compared to trading in stocks or ETFs. CIRO published a List of Securities Eligible for Reduced Margin (LSERM) on February 5, confirming that cryptocurrency funds are excluded until further notice. This decision likely increases the chance of forced liquidations for crypto investors during market downturns. To qualify for reduced margin, securities must demonstrate lower volatility and higher liquidity, with specific criteria regarding price volatility measures and market capitalization. Among these, a price volatility measure must be 25% or below, and securities require a public float value exceeding 100 million CA$ along with a minimum trading volume. Additionally, securities must be listed on a Canadian exchange for a minimum of six months, or meet higher standards if listed for a shorter period.

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