Binance Withdraws From Canada Amid New Crypto Regulations

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Posted May 12, 2023 Last Updated 5 hours 3 mins read

Binance is the largest cryptocurrency exchange in the world. Photo by DADO RUVIC/Reuters Content of the article

Binance, the world’s largest cryptocurrency exchange, said it was pulling out of Canada after regulators in the country put pressure on the crypto sector.

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After tangling with securities watchdogs for more than a year, Binance said via Twitter on May 12 that new guidelines from regulators regarding stablecoins, as well as limits on how much investors can place with crypto exchanges, meant that the Canadian market was no longer tenable. for the exchange of digital assets.

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We postponed this decision for as long as we could to explore other reasonable ways to protect our Canadian users, but it has become apparent that there are none, Binance said in a tweet, adding that it was proactively withdrawing from the Canadian market.

The platform, founded by Canadian national Changpeng Zhao, said it will send its remaining Canadian users emails explaining how the withdrawal will affect their accounts. A person familiar with the matter described the process as slowing down.

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In late 2021, Binance publicly fell out with Canada’s largest provincial regulator, the Ontario Securities Commission (OSC). register with the Ontario regulatory body.

The OSC said the recording was required and did not take place. Binance eventually signed a legally enforceable undertaking in March 2022 pledging to the OSC that its activities involving Ontario residents would cease outside of expressly permitted actions to protect investors and that it would prevent further activity .

In late 2022, following the dramatic collapse of crypto platform FTX Inc., a dozen securities supervisors from other provinces and territories joined the OSC in taking a tougher line, demanding the registration and other rules for digital currency players.

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Among the requirements is a promise that Canadian client assets will be held by an appropriate custodian and that those assets will be segregated from the platforms’ proprietary business.

Crypto platforms are also prohibited from offering margin or leverage to any Canadian client under rules unveiled in December 2022 by the Canadian Securities Administrators (CSA), an umbrella organization of the 13 securities regulators. provincial and territorial monitoring across the country.

Crypto regulation

Regulators have clarified that platforms located outside of Canada that are accessible to Canadians like Binance, which was founded in Shanghai in 2017 and has a holding company in the Cayman Islands, will be considered operating in Canada for the purposes of the regulation. securities regulation.

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In addition, the CSA has established new rules for stablecoins to ensure compliance with derivatives rules and their use by retail investors.

Binance said that while it does not agree with the new rules, the company hopes to continue to engage with Canadian regulators on a thoughtful and comprehensive regulatory framework. The company hasn’t ruled out returning to the country one day if Canadian users once again have the freedom to access a broader suite of digital assets.

We would like to thank the regulators who have worked with us in collaboration to meet the needs of Canadian users, Binance said in its tweet.

The OSC’s firm’s approach to crypto regulation over the past few years has been to tangle with FTX behind closed doors and order the firm to immediately halt the sale of crypto assets and derivatives to all retail investors in Ontario until it is properly registered or granted restricted dealer status, the sources say.

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That limited the fallout in Canada’s largest province from the November 2022 collapse of FTX, whose former chief executive Sam Bankman-Fried was later charged with fraud and conspiracy in the United States. Sources familiar with the matter estimate that the platform had more than 30,000 users in Canada when it imploded following a run on crypto assets that revealed a significant lack of funds.

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Ontario regulators’ tougher stance on cryptocurrency dates back to the 2019 collapse of QuadrigaCX, a major Canadian crypto player with about 40% of its 76,000 customers in the province.

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