The Saskatchewan Regulations 59/2025 introduce important amendments to The Securities Commission (Adoption of National Instruments) Regulations, specifically related to National Instrument 81-102, which governs mutual funds and other investment funds in the province. These amendments reflect a significant development in the regulatory framework by explicitly addressing the treatment of crypto assets within mutual funds, thereby modernizing fund management regulations to keep pace with emerging financial technologies.

The amendment starts by revising the definition of “alternative mutual fund” to explicitly include crypto assets alongside physical commodities. This is a notable inclusion as it formally acknowledges crypto assets as a category of permissible portfolio investments under certain conditions. Previously, regulations focused on traditional asset classes such as precious metals and physical commodities, but the updated rules recognize the growing role of digital assets in investment strategies.

Significant changes are made to subsection 2.3(1), which governs the types of assets mutual funds can purchase. The revised language now permits an alternative mutual fund to purchase permitted precious metals, precious metal certificates, or derivatives based on physical commodities or crypto assets, but with strict limits. For instance, after such purchases, the aggregate value of precious metals and crypto asset-related holdings must not exceed 10% of the mutual fund’s net asset value. This cap is designed to control risk exposure and ensure diversification, reflecting a cautious approach to integrating these volatile asset classes.

Further amendments specify that mutual funds may only purchase, sell, use, or hold crypto assets or derivatives thereof if they meet certain criteria. Exceptions are provided for crypto assets that are fungible and traded on recognized exchanges within Canada or, in British Columbia, on recognized or specially designated exchanges. This ensures that only crypto assets with sufficient market recognition and regulatory oversight can be included in portfolios, improving investor protection. Similarly, the regulations allow funds to enter into derivatives contracts based on crypto assets only if those contracts trade on recognized exchanges.

The regulations introduce stringent custody requirements for crypto assets held as portfolio assets. Custodians and sub-custodians of investment funds must hold the private cryptographic keys for these assets in offline storage, commonly known as “cold storage,” except when assets are needed to facilitate portfolio transactions. This requirement aims to reduce the risks of hacking and theft associated with digital asset custody, reflecting growing industry standards for safeguarding crypto holdings.

Saskatchewan (59/2025) July 23, 2025
Disclaimer: Insights are for informational purposes only and do not reflect RRI’s official position or constitute legal opinion.