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Canada’s Canadian Investment Regulatory Organization (CIRO) has issued an interim “Digital Asset Custody Framework” that sets custody expectations for CIRO Dealer Members operating crypto-asset trading platforms (CTPs), covering “crypto assets and tokenized assets, including stablecoins,” with the guidance effective immediately. CIRO announced the framework on February 3, 2026, describing it as a response to custody-related risks in digital-asset markets and positioning it as a supervisory benchmark for firms offering crypto-asset and tokenized-asset services.
CIRO is implementing the approach through terms and conditions of CIRO membership for Dealer Members operating CTPs, rather than through a finalized rule set, and says firms must either use CIRO-approved custody locations or meet specified internal-custody conditions (where permitted). The accompanying CIRO notice outlines that custodians must be reviewed and approved by CIRO before being used as an “Approved Crypto Custody Location” or “Approved Tokenized Asset Custody Location,” with applications expected to include governance approvals, audited financials, assurance reports, and the custody agreement.
Operationally, the framework introduces a tiered model for acceptable crypto custodians, with custody concentration limits linked to custodian tier: Tier 1 and Tier 2 may hold up to 100% of a dealer’s crypto assets, Tier 3 up to 75%, and Tier 4 up to 40%, while internal custody is capped at up to 20% of the value of crypto assets held for clients and the dealer’s own account (subject to conditions). CIRO also sets segregation, monitoring, and reporting expectations—such as daily segregation calculations and escalation pathways for unresolved deficiencies—and notes that repeated or unresolved breaches can trigger supervisory action, including potential Early Warning designations under CIRO’s dealer capital regime.
CIRO frames the package as interim guidance, stating there is currently no permanent CIRO Rules framework specifically governing digital-asset custody by investment dealers, and that the terms and conditions may inform future rulemaking. The notice distinguishes custody of crypto assets from custody of tokenized versions of traditional financial instruments and indicates tokenized assets should be held with entities that qualify as Acceptable Securities Locations under CIRO’s existing custody concepts, supplemented by additional digital-custody safeguards; CIRO also notes that its custodial classifications are not intended to pre-judge Canadian Securities Administrators (CSA) policy direction on tokenization.
The immediate impact falls on CIRO Dealer Members operating CTPs and on custodians seeking to serve them, since custody arrangements now require CIRO approval and ongoing compliance with tier-based concentration limits (for crypto assets), internal-custody constraints, and reporting/segregation controls set out in CIRO’s guidance. Tokenized-asset issuers and platforms that distribute products through CIRO-regulated dealers may also be affected insofar as tokenized assets must be held at CIRO-approved tokenized-asset custody locations and dealers must meet CIRO’s notification and operational requirements when initiating or materially expanding tokenized-asset activity.
