Binance Pulls Out of Canada, Cites Regulatory Pressure
On May 12, the largest crypto exchange by trading volume, Binance, revealed plans to exit Canada. The Binance decision came days after the Canadian regulators imposed new crypto regulations.
The new rules highlighted the mandatory registrations requirements and investor limits for crypto firms. Recently Canadian regulators introduced new preregistration requirements (PRU) for virtual asset service providers (VASP) in the region.
Factors Influencing Binance to Exit Canada
The regulators explained the potential legal actions that will be taken for non-compliant crypto firms in Canada. According to a publication by the Ontario Securities Commission (OSC), all crypto entrepreneurs and traders are urged to adhere to the regulations.
Following the regulatory pressures for crypto assets in Canada, the Binance team issued an official tweet revealing plans to exit the unfriendly market.
According to the tweet, the new rules on stablecoin issuance and investor limits undermine the suitability of Canada for Binance. The Binance team plans to engage with Canadian regulators to develop a sufficient and reliable regulatory framework for crypto assets.
Analysis of Canadian New Crypto Regulations
In the meantime, the crypto exchange expressed its dissatisfaction with the new regulations in Canada. A review of the new regulation in Canada reveals that most stablecoins pegged to the dollar currency were classified as a security.
On the other hand, customers are prohibited from buying and selling crypto assets and are required to seek regulatory approval to obtain either securities or digital derivatives. Based on the Canadian Securities Administrators (CSA) requirements, all crypto approval will undergo multiple due diligence checks, which are costly and time-consuming.
A scrutiny of the Canadian regulations revealed that the new rules are complex to understand. Also, the rules are dynamic due to uncertainty in the crypto sector.
The Binance tweet explained that the crypto exchange would restore its operation in Canada in the long run after the country amends the regulations for digital assets.
Binance Reveal Next Move
A report from the chief executive of Binance, Changpeng Zhao, confirmed that Binance would return to Canada when the country permits users to access various digital assets.
Reportedly, the Binance team issued an official report to the Canadian users instructing them to complete unfinished businesses on the crypto exchange before September 30. As of October, the Binance team plans to activate the liquidation mode on the crypto exchange.
Before this, the Binance team had withdrawn its operation from Ontario due to competing interests with the regulators. In the remaining provinces in Canada, it was reported that Binance offered customers crypto-related services and products.
Binance has joined other crypto firms exiting the Canadian market due to regulatory pressure. On March 20, the crypto exchange OKX revealed plans to wind down operations in Canada by June.
The OKX tweet revealed that the crypto exchange would suspend the creation of new accounts due to the new regulations. Afterward, the prominent crypto derivatives exchange dYdX announced plans to sunset its operation in Canada due to new restrictions.
Nevertheless, the exit of dYdX from Canada coincides with Paxos’ strategic move to wind down regional operations. On the contrary, as other fast-growing crypto firms exit Canada, Kraken announced plans to remain in the country.
Will Binance Return to Canada?
On March 30, the Kraken Group signed the preregistration undertaking document with the OSC to safeguard the investor from exploitation. Meanwhile, only 11 crypto firms are legally allowed to operate in Canada.
The global regulatory watchdogs have been targeting Binance due to its involvement in the fallout of FTX that resulted in price fluctuation. It was reported that the turbulent crypto market and price fluctuation compelled policymakers to adopt new regulations. The ammended crypto regulation requires the crypto firm to disclose its operation along with the customers’ digital assets.
Following the adoption of stringent crypto regulations, Zhao was accused by the U.S. Commodity Futures Trading Commission of noncompliance. The regulators slammed the operation of Binance, labeling it as illegal and a sham.
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