Amidst the intense regulatory environment prevailing in Canada, several exchanges including the bigger ones are being forced to move out of the country. Canada has been intending to tighten its authority over the sector and the recent incidents have given it more reasons to do so.
According to a person familiar with the matter, Binance, the world’s largest crypto exchange, might have to exit from Canada as the country is tightening its rules for crypto exchanges. However, its rival Coinbase is in talks with regulators about remaining in Canada.
Reportedly, Coinbase which is a US-based exchange is discussing ways to get the appropriate license that will legitimize its presence and business procedures in the nation. Elliott Suthers, Coinbase’s communications director, also briefed a media house on the company’s commitment to the Canadian market. He said:
We remain as committed as ever to the Canadian market as a core component of our international road map.
On the other hand, sources familiar with the matter who want to be anonymous suggest that Binance is going to pull out of Canada but the firm’s executives have different answers to cater to. Reportedly, Changpeng Zhao, the CEO of Coinbase, is a Canadian citizen.
A spokesperson for Binance said that the exchange “has not made definitive plans yet.” However, another executive after the news started to spread said that the exchange “is actively engaged with the [Canadian Securities Administrators] in its pursuit of registration.”
Sources reveal that Canadian authorities have set March 24 as the deadline for crypto firms to commit to tightening the rules around crypto in the country. The country suffered a high-profile exchange blow-up several years ago when QuadrigaCX went under. Earlier this month, OKEx, another firm, announced its departure from Canada.
While Crypto.com plans to remain in Canada, Blockchain.com has confirmed that it will leave the country alongside Deribit who informed its customers of its plans of departure. Kraken is expected to make an announcement on the matter soon.
On February 22, Canada announced the new regulatory framework that requires the segregation of assets held in custody and tightens rules for re-hypothecation, margin trading, and certain trades involving proprietary tokens or stablecoins.
Crypto exchanges around the globe have been facing the wrath of regulators. In the United States, the Securities and Exchange Commission (SEC), has been carrying an enforcement-oriented approach which has come as trouble to the firms operating in the country.
In February, SEC fined Kraken and sent a Wells Notice to Paxos for selling unregistered securities. Paxos initially categorically disagreed with the regulator and that BUSD is not a security under federal laws but later confirmed that it was having talks.
Just last week the SEC issued another notice to Coinbase, which has received severe criticism from the firm’s executives. Brian Armstrong ignited the larger crypto community in choosing crypto-friendly lawmakers and the head of the European division stated that the US is losing its position as the crypto hub and other nations are interested in taking that position.
This week, the Commodities Futures Trading Commission (CFTC) filed charges against Binance for violating federal laws. To this, the CEO expressed his disappointment and gave clarifications to the allegations.
The approach of the regulator has invited concerns and criticisms from lawmakers for pushing innovation away. In the case of Canada, while there has been a huge investor base and the nation accounts for the second largest number of crypto ATMs, companies moving away is a sincere concern to the crypto industry.