Canadian investors will be exempt from new United States investment regulations that require government oversight of foreign investments in US businesses focused on “critical technologies,” infrastructure, and sensitive personal data.
Canada, Australia, and the United Kingdom are the only three foreign states that are “excepted.”
On Monday, the US Department of the Treasury’s Committee on Foreign Investment in the United States (CFIUS) released the final two regulations needed to implement changes brought about by the Foreign Investment Risk Review Modernization Act (FIRRMA), which was passed in August 2018.
FIRMA was passed in order to close gaps between the types of transactions that CFIUS was able to review, and those it was not able to review, aiming to address national security concerns more effectively. Under the new regulations, certain investment into US businesses from foreign investors will now be reviewed and need clearance from the CFIUS panel.
In the statement on Monday, CFIUS revealed that Canada, Australia, and the United Kingdom are the only three foreign states that are “excepted” from the new regulations that are set to come into effect on February 13.
The announcement follows an outcry from the Canadian investment community, which saw Canadian organizations pen an open letter to the US Department of the Treasury in July. The Canadian Venture Capital and Private Equity Association (CVCA), BIOTECanada, the Canadian Chamber of Commerce, and Medtech Canada called for Canada to be exempt from the reviews, noting that as a close ally to the US, Canada “does not present national security challenges.”
Kim Furlong, CEO of the CVCA, told BetaKit in July that FIRRMA put the ability of Canadian VCs to participate in US deals because of the potential for any review process to cause delays. Several Canadian VCs have called the regulations a protectionist policy by the Trump administration.
The open letter recommended an exemption process using the Country Specification provision in FIRRMA. CFIUS appears to have taken public comments into account and has developed a list of excepted foreign states. CFIUS stated that it chose Canada, Australia, and the United Kingdom “due to certain aspects of their robust intelligence-sharing and defence industrial base integration mechanisms with the United States.”
“Because this is a new concept with potentially significant implications for US national security, CFIUS is initially identifying a limited number of foreign states,” the committee stated.
While the committee noted that more countries may be added to the list in the future, there are requirements that must be met in order to remain exempt. There is also a time limit on that exemption, of February 13, 2022. CFIUS will be responsible for making determinations on a foreign state’s eligibility by assessing its national security and bilateral cooperation with the US.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
