Who holds the private keys decides what can go wrong. On a custodial platform, the company holds the keys and you hold an account. In self-custody, you hold the keys and there is no account to reset. Neither removes risk; each moves it somewhere different.
| Registered Canadian platform | Self-custody wallet | |
|---|---|---|
| Who holds keys | The platform (often through a custodian) | You |
| Forgotten password | Account recovery process | Lose the phrase, lose the funds |
| Platform failure | You depend on its custody and segregation | Not applicable |
| Canadian rules | Registration, custody and conduct terms (CSA, CIRO) | None apply to your wallet |
| Deposit insurance | No CDIC cover for crypto | No CDIC cover |
| DeFi access | Limited or none | Full |
| Main risks | Platform insolvency, freezes, withdrawal limits | Lost keys, phishing, malicious approvals |
| Suits | Beginners, small amounts, buying and selling | People ready to run backups and security habits |
QuadrigaCX, a Canadian crypto exchange, collapsed in 2019; an Ontario Securities Commission staff review in 2020 found its founder had committed fraud. Rules for platforms have tightened since, including custody with qualified custodians and segregation of client assets under CSA's enhanced undertakings (2023-02-22) and CIRO's custody framework (2026-02-03).
Many people use both: a registered platform to convert between dollars and crypto, and a self-custody wallet for long-term holdings or DeFi. If you do that, check the platform with the platform check and your own habits with the readiness check.
Questions people ask
Is self-custody safer than an exchange?
It removes the risk of the platform failing or freezing withdrawals, but adds the risk of losing keys or being phished. Which is safer depends on your habits and the platform.
Are crypto platforms in Canada required to protect my assets?
Registered platforms and those under pre-registration undertakings must meet custody terms such as using qualified custodians and segregating client assets. That is not deposit insurance; crypto is not CDIC-covered.
Can I use DeFi from a platform account?
Generally not directly. DeFi apps connect to wallets whose keys you control.
Sources and dates
- CSA strengthens oversight of crypto asset trading platforms (Staff Notice 21-332) — Ontario Securities Commission (CSA release)in force
Page date 2023-02-22 · checked 2026-10-30. Enhanced undertakings: custody with qualified custodians, segregation, no margin or leverage, no stablecoin purchases without CSA consent. - Crypto platforms: regulation and enforcement actions — Canadian Securities Administratorsin force
Page date 2025-10-22 · checked 2026-10-30. Platforms serving Canadians, including foreign ones, must register; operating platforms sign a pre-registration undertaking while under review. - CIRO issues guidance on digital asset custody for crypto-asset trading platforms — CIROin force
Page date 2026-02-03 · checked 2026-10-30. Tiered, risk-based custody framework for dealer members operating crypto platforms; effective immediately. - What's covered — Canada Deposit Insurance Corporationin force
No date shown on page · checked 2026-10-30. Up to $100,000 per category per member institution; cryptocurrencies, including stablecoins, are not covered.
Education only. Nothing on this page is financial, investment, tax or legal advice, or a recommendation to buy, sell, stake, lend or borrow any crypto-asset. Crypto-assets can lose some or all of their value and are not covered by CDIC. Canadian rules change: check the dated sources above and talk to a qualified professional about your situation. Full disclaimer.