Why does Ndax require users to fill out an appropriateness assessment?

As part of our commitment to regulatory compliance and ensuring a safe trading environment, we are implementing certain investor protection measures in connection with the Pre-registration Undertaking (PRU) dated March 23, 2023, that Ndax Canada Inc. (Ndax, we, us, or our) entered into in favor of the Alberta Securities Commission and the other members of the Canadian Securities Administrators. One of these measures is the introduction of an appropriateness questionnaire that users must complete. This questionnaire will help us to complete an appointment assessment that will serve as a crucial element in ensuring that users have the necessary knowledge, experience, risk tolerance, and financial means to make informed trading decisions. This support article aims to provide a summary description of why we require users to fill out an appropriate questionnaire and highlights the importance of the appropriateness assessment.

An appropriateness questionnaire consists of a series of questions designed to evaluate a user's risk tolerance, familiarity, knowledge, and experience in trading cryptocurrencies. The questionnaire helps assess whether users understand the risks associated with trading and if they are equipped to make informed decisions and assesses their understanding of products and services offered on the Ndax platform. Prospective users will be required to complete the appropriateness questionnaire as part of the account opening process on the Ndax platform. If not previously completed, any existing users will be required to complete the appropriateness questionnaire, and Ndax will conduct an account appropriateness assessment on those existing users.

The requirement to collect the information contained in the appropriateness questionnaire is an essential part of the PRU that allows Ndax to conduct the necessary account appropriateness assessment for a prospective user.

By requiring prospective users to fill out an appropriate questionnaire, we can ensure that users have the necessary knowledge and experience to make informed trading decisions and are able to withstand the risks and market fluctuations. This questionnaire is designed to highlight some of the aspects of crypto trading that the users may not have thought about previously and can help users with making decisions within their risk tolerance. It also allows Ndax to set appropriate loss limits for the user account based on the information gathered, and add access to the range of products and services that are deemed appropriate for the user.

After prospective users fill out the appropriateness questionnaire, their responses will be assessed to determine their level of knowledge and experience with trading in crypto assets, their risk tolerance, and other factors. Based on their answers, prospective users may be approved immediately and have full access to all the products and services offered on the Ndax platform that they’ve opted into. If the prospective user has provided information that indicated a lack of understanding of how trading in crypto assets works, the user may have to complete educational materials or may be subject to trading (or staking) restrictions and, in some cases, the account may not be opened (or in the case of existing users, their account may be closed).

The appropriateness questionnaire is a vital component of our commitment to implementing the enhanced investor protection measures contemplated under the PRU, including assessing whether an account on the Ndax platform is appropriate for a prospective user.

Please note that Ndax Canada Inc. has submitted an application for registration under securities legislation in Canada, but is not currently registered, and is operating under the provisions of a pre-registration undertaking (PRU) dated March 23, 2023, entered into favor of the Alberta Securities Commission and the other members of the Canadian Securities Administrators. There can be no assurance that Ndax will be registered and if it fails to become registered in any province or territory in Canada, it will promptly cease carrying on registrable activity in such province or territory.