NDAX CANADA INC.

NDAX Canada Inc. (NDAX) is admitted to membership in the Canadian Investment Regulatory Organization, as an Investment Dealer Member, effective December 19, 2024.

The head office is located at Suite 1900, 215 9 Avenue S.W., Calgary, AB T2P 1K3.

Telephone: 1-833-727-5329

The Executives are:

• HAMMOUD, Bilal, Chief Executive Officer
• BARANOVSKAYA, Julia, Chief Compliance Officer
• GUINA, Sarah, Chief Financial Officer
• RASUL, Tanim, Chief Operating Officer
• HAMMOUD, Hussein, Chief Technology Officer

Concurrent with the approval of the membership of NDAX, the CIRO Board of Directors also granted exemptive relief from certain requirements of the Investment Dealer and Partially Consolidated Rules (IDPC Rules) to NDAX. In particular, the Board provided:

• relief from the requirement under IDPC Rule 4456 to maintain a financial institution bond (FIB insurance) providing coverage for all types of losses specified in that Rule; and
• relief from the requirement under IDPC Rule 4342 that client assets must be held at an Acceptable Securities Location and the requirement set out in Form 1 that imposes a capital penalty equivalent to 100% of the market value of the assets held at any non-Acceptable Securities Location
• relief from the requirement under IDPC Rule 4555 to maintain mail insurance that covers 100% of losses from any outgoing shipments of negotiable or non-negotiable securities by registered mail

subject to the conditions described below.

1. Authority to Grant Exemptions

IDPC Rule 1302 permits the CIRO Board of Directors to exempt a Dealer Member from any provision of the Rules where it is satisfied that to do so would not be prejudicial to the interests of Dealer Members, their clients or the public. In granting an exemption, the Board may impose such terms and conditions as are considered necessary.

2. Exemptions Granted and Conditions

As is standard for exemption orders of this type, the exemption order also specified that:

• The Board of Directors reserves the right to revoke the exemptive relief granted to NDAX, at any time, upon notice to the applicant.
• This exemption relief is void upon the earliest of the following taking place:
  • The implementation of any material amendments to the rules by CIRO or the provincial and territorial securities regulators relating to insurance requirements and/or the capital requirements arising from securities held in custody at a non-acceptable securities location. CIRO, and not NDAX, will determine whether any rule amendments implemented are considered to be related to insurance requirements and/or the capital requirements arising from securities held in custody at a non-acceptable securities location and are considered to be material, thus rendering this exemption order void.
  • NDAX’s breach of any of the representations made in its application for exemptive relief.
  • NDAX’s breach of any of the conditions relating to the exemptive relief granted, respect to the Insurance Exemption and Custody Exemption.

Staff will only recommend approval of exemptive relief of this type under exceptional circumstances, and where the Dealer Member demonstrates that it has taken all reasonable steps to comply with CIRO Rules.

In addition, in connection with NDAX’s application for membership, NDAX made certain representations and agreed to provide certain undertakings to CIRO.

Insurance Exemption

The CIRO Board of Directors granted to NDAX exemptive relief from the requirement under IDPC Rule 4456 to maintain FIB insurance providing coverage for all types of losses specified in that Rule.

This exemption is subject to the following conditions:

1. The relief and its conditions apply only to NDAX’s distribution of Crypto Contracts and operation of a platform that facilitates the buying, selling, and holding of crypto assets.
2. NDAX shall obtain a FIB policy that provides coverage for all its crypto assets held in external custody (initially proposed to be Coinbase, BitGo, and Tetra) once one becomes available to NDAX.
3. NDAX shall obtain a Vault Risk Policy pertaining to crypto assets held at Coinbase Custody Trust, LLC (“Coinbase”) and BitGo Trust Company, Inc. (“BitGo”) that satisfies the following:
   • the loss coverage under the Vault Risk Policy must be equal to or greater than two times that which would be required under CIRO’s minimum insurance coverage formula for assets held at Coinbase and BitGo
   • the terms and conditions of the Vault Risk Policy must be acceptable to CIRO
   • any insurance deductible under the Vault Risk Policy must be deducted when NDAX determines its risk adjusted capital.
4. NDAX must fund a NDAX Trust Account (for cash) and/or Segregated Custody Account (for securities, which must include only those described in the Notes and Instructions to Section D, Line 2 of Statement D of the IDPC Form 1) dedicated to covering an amount greater than or equal to CIRO’s minimum FIB insurance coverage formula for client assets that are held at Tetra.
5. NDAX must ensure that (i) the NDAX Trust Account is opened at an “Acceptable Institution” for the purposes of CIRO IDPC Rule section 1201 and CIROIDPC Form 1, (ii) the Segregated Custody Account is opened at an Acceptable Securities Location for the purposes of IDPC Rule section 4348 and IDPC Form 1, and that the NDAX Trust Account and the Segregated Custody Account is operated in a manner acceptable to CIRO.
6. NDAX is prohibited from using client free credit cash balances to fund the NDAX Trust Account and the Segregated Custody Account.
7. When determining its risk adjusted capital, NDAX must deduct the amount normally required to be provided under CIRO’s minimum FIB insurance coverage formula for assets held at Tetra.

Custody Exemption

In respect of crypto assets held at two of NDAX’s proposed custodians, BitGo Trust Company Inc. (BitGo) and Tetra Trust Company (Tetra), the CIRO Board of Directors granted exemptive relief from the requirement under IDPC Rule 4342 that client assets must be held at an Acceptable Securities Location and the requirement set out in Form 1 that imposes a capital penalty equivalent to 100% of the market value of the assets held at any non-Acceptable Securities Location.

The exemptive relief is subject to the following conditions:

BitGo

1. The relief and its conditions apply only to NDAX’s distribution of Crypto Contracts and operation of a platform that facilitates the buying, selling, and holding of crypto assets.
2. This limited relief will be granted to NDAX for an initial period of one year and may be extended at the Board’s discretion if they determine that BitGo is making sufficient progress toward meeting the ASL requirements under the General Notes and Instructions to Form 1.
3. NDAX must ensure the total market value of crypto asset holdings held at BitGo does not exceed an amount specified by CIRO (the Bitgo Cap). The cap will be reviewed, at a minimum, on a bi-annual basis by CIRO Staff and may be adjusted at Staff’s discretion. NDAX must promptly notify CIRO if NDAX believes NDAX may exceed the cap.
4. NDAX must provide clear disclosure informing clients of the regulatory oversight of BitGo by the SDBB and provide a link to SDBB’s website. The content and form of this disclosure will require the approval of CIRO staff and clients must be required to acknowledge they have read and agreed to the disclosure.
5. NDAX must ensure, and regularly confirm to CIRO, that BitGo at all times:
   • maintains its good standing status as a South Dakota licensed public trust company,
   • maintains its good standing status with, and continues to be regulated by, SDDB, and
   • complies with the SDDB capital and insurance requirements.
6. NDAX will obtain from BitGo a SOC 2, Type 2, report to be provided to CIRO on an annual basis.
7. Each year NDAX will obtain from BitGo and provide to CIRO a copy of the audited financial statements prepared for BitGo.
8. NDAX’s custody agreement with BitGo must be in a form acceptable to CIRO and NDAX must ensure that any proposed material amendments to the agreement are approved by CIRO.
9. NDAX will promptly notify CIRO if any United States regulatory authority makes a determination that BitGo, for NDAX clients’ crypto assets, is not permitted by the regulatory authority to hold client crypto asset.
10. NDAX will notify CIRO, promptly, of any material breach or failure of BitGo’s systems of controls or supervision in relation to the crypto assets held by BitGo, and the steps taken by NDAX to address each such breach or failure.

Tetra

1. The relief and its conditions apply only to NDAX’s distribution of Crypto Contracts and operation of a platform that facilitates the buying, selling, and holding of crypto assets.
2. This limited relief will be granted to NDAX for an initial period of one year and may be extended at the Board’s discretion if they determine that Tetra is making sufficient progress toward meeting the Acceptable Securities Location requirements under the General Notes and Instructions to Form 1 or such other alternative as is developed for crypto assets.
3. NDAX must ensure the total market value of crypto asset holdings held at Tetra does not exceed an amount specified by CIRO (the “Tetra Cap”). The cap will be reviewed, at a minimum, on a bi-annual basis by CIRO Staff and may be adjusted at Staff’s discretion. NDAX must promptly notify CIRO if they believe NDAX may exceed the cap.
4. NDAX must provide clear disclosure informing clients of the regulatory oversight of Tetra by the Alberta Treasury Board and Finance (ATBF) and provide a link to ATBF’s website. The content and form of this disclosure will require the approval of CIRO staff and clients must be required to acknowledge they have read and agreed to the disclosure.
5. NDAX must ensure, and regularly confirm to CIRO, that Tetra at all times:
   • maintains its good standing status as an Alberta licensed trust company,
   • maintains its good standing status with, and continues to be regulated by, ATBF, and
   • complies with ATBF capital requirements.
6. NDAX will obtain from Tetra a SOC 2, Type 2, report to be provided to CIRO on an annual basis.
7. Each year NDAX will provide CIRO with a copy of the audited financial statements prepared for Tetra.
8. NDAX’s custody agreement with Tetra must be in a form acceptable to CIRO and NDAX must ensure that any proposed material amendments to the agreement are approved by CIRO.
9. NDAX will promptly notify CIRO if any Canadian regulatory authority makes a determination that Tetra, for NDAX clients’ crypto assets, is not permitted by the regulatory authority to hold client crypto assets.
10. NDAX will notify CIRO, promptly, of any material breach or failure of Tetra systems of controls or supervision in relation to the crypto assets held by Tetra, and the steps taken by NDAX to address each such breach or failure.
11. NDAX will ensure that Tetra maintains a Vault Risk insurance policy, in a form and with coverage agreed to from time to time with CIRO Staff, and naming NDAX as a loss payee.

Mail Exemption

The CIRO Board of Directors granted to NDAX exemptive relief from the requirement under IDPC Rule 4555 to maintain mail insurance that covers 100% of losses from any outgoing shipments of negotiable or non-negotiable securities by registered mail. NDAX undertook not to use mail for outgoing shipments of money or securities, negotiable or non-negotiable, by first-class mail, registered mail, registered air mail, express or air express. NDAX undertook further that should business circumstances change such that NDAX determines it appropriate to use the mail to deliver money or securities, NDAX will notify CIRO and acquire the coverage required under IDPC Rule section 4455 before proceeding. Accordingly, the exemption is not subject to any conditions.

For questions and further information regarding this Bulletin, please contact memberintake@ciro.ca.